>> okay, this meeting is now being recorded. commissioner you may begin the special retirement board meeting of september 15, 2022. >> great. i'm going to be filling in as vice president for supervisor safai, until he's here. he got tied up in the last-minute deal. welcome to the retirement board meeting. this meeting is held in a hybrid format with the meeting

occuring on live on sfgovtv, i would like to remind all individuals present and attending the meeting in-person, that all health and safety protocols and building rules must be adhered to. failure to adhere to these rules, may result in your removal from this room. we appreciate your cooperation in these important rules and requirement of everyone's health and safety. please also note that hand sanitizer station right side available throughout the building and all available upon request at the front desk. madam secretary please call the roll. >> commissioner brijds. bridges. >> present. >> commissioner--. >> present. sxwr. commissioner began deis absent.

commissioner. >> present. >> clerk: commissioner safa s*i has not arrived saoer. commissioner tomas. >> present. >> clerk: we have a quorum. >> call the item. >> clerk: item 2 public comments. there will be an opportunity for public comment and there will be an opportunity to comment on each discussion and action item on the agenda. each comment is limit today two minutes. public comment will be taken both in-person or remotely for video and call-in. the public will take public comment first from people attending the meeting in-person and people attending remotely. comments are opportunities to speak during the public comment period, are available by phone, by calling 415-655-0001, access

code 24995482539 then pound and then pound again. when connected you will hear the meeting discussions but you'll be muted and in listen mode only. when your item of interest comes up, please press star-3 to be added to speaker line. best practice is to call from a quiet location and speak slowly. please note that city policies prohibit discriminatory harassing, conduct against city employees and others during public meeting and will not be tolerated. over public comment is permitted only on matters within the jurisdiction of this body. we thank you for joining us. mr. hellfan. >> thank you. would you call the next item please. >> clerk: item 3, action item review and approval of

september 2022 board resolution to continue to meet in-person for some members being allowed to attend remotely. >> can i ask you a question, can we put this on up for motion by referral to this item? can you turn it? can you this be referred by reference to this? or do we have to read it? >> you have to read it out per the order. >> okay, thank you. >> clerk: but it does not require a voice motel because there are no remote members here. >> okay, thank you. so this is the action to adopt

september 22, resolution that the entire board continue to attend in-person with some members attending remotely for at least the next 30 days and also to adopt the findings under new urgency legislation as government code section 54953 pa rin e and 361 including that the state and the city remain in a state of emergency due to the covid-19 pandemic and conducting meet approximatesing of the retirement board and its committees in-person without allowing certain members to attend remotely with imminent risk that the health. and providing that all meetings of the retirement board and its committees will provide an opportunity for members of the public to address the body and will otherwise occur in a

manner that protects the statutory and constitutional rights parties and members of the public attending the meeting in-person or via tele conferencing. do i hear a motion. >> second. >> motion has been made by commissioner physicalcal and seconded by aj. madam secretary, you may want to take a vote. le no we don't. we'll have public comment at this time. >> right. >> clerk: we have no public comment at this time. callers if you have not done so, please dial star-3, wait until the system inkaitsz that you have been unmuted. moderator do we have any callers on the line. >> madam secretary, we have no

people on the line. >> clerk: public comment is now closed. >> okay, the motion has been made and seconded madam sblgt you can call the roll. >> commissioner bridges. >> aye. >> drinkscal. >> aye. >> commissioner high. >> aye. >> president safai. >> aye. >> and commissioner tomas. >> aye. >> we have five ayes, motion passes. >> so i will gladly turn the chair back to the chair who was just oh, he's getting his headset. you want to just move to closed session then.

okay, i'll do the final at this time the board will be moving into closed session for item 4 pa rin a conference with legal council existing litigation, immediately after the closed session, item 4 a will be moving into 4b investments. moving into closed session, we will take a person in-person public comment, secretary. >> vice president, we also need because we're going to be invoking the client attorney privilege we need a motion to invoke to move into closed session to hear pending litigation matter. >> okay, so this is a separate motion. ?fm right, because it's a little separate from closed session. >> okay, so let's take. can we merge the motions?

>> yes, you mean merge to invoke the attorney-client privilege. >> yes. >> that's fine. >> so let's >> i move the merge motion. >> i second, one for legal present matters. >> right so madam secretary, you want to have call in-person public comment? >> thank you, we have no inperson public at this time. reminders to callers to press star 3 to be added to the queue. moderator are there any callers. >> madam secretary, there are no callers online. >> thank you, hearing there are no callers, public comment is now closed. >> okay, we now madam secretary, you want to call roll? >> we need to leave this open session and those participating

in the legal to move into 4 a, legal closed si time. >> we need, did we get a roll call vote. >> no, not yet. >> commissioner bridges. >> aye. >> thank you, commissioner drinkscal. >> aye. >> commissioner halfan. >> aye. >> commissioner safai. >> aye. >> commissioner tomas. >> aye. >> thank you, i have five ayes, motion passes. >> okay, please leave the open session and we'll move into closed session, 4 a, conference with legal c >> of september 15, 2022. you may begin the meeting. >> great. we are on --we are back in open session at this time.

madam secretary, please call the roll. >> thank you. [roll call] >> thank you. we have a quorum. >> wonderful. so, there is a motion whether to disclosez discussion held in closed session under the san francisco administrative code section 67.12a. can i is a motion, please? >> i move that we do not disclose. >> second. >> motion made by commissioner heldfond and (inaudible) >> thank you, we have no in-person public at the time. reminder to

callers, press star 3 to be added to the queue. moderator, do we have callers on the line? >> madam secretary, there are no callers on the line. >> thank you, public comment is now closed. >> great. public comment is closed. there is motion made by commissioner heldfond, seconded by commissioner thomas not to disclose what was discussed in closed session. madam secretary, please call the roll. >> thank you. [roll call] >> thank you, 5 ayes. motion passes. >> great. next item. >> item 5, general public comment. >> wonderful. we'll

take in-person public comment. see there is no in-person public comment public comment is closed and open for public comment callers. madam secretary, please call the first speaker. >> allison romano will read the e-mail we received. >> thank you. e-mail was received from john stenson. when china invaded taiwan the united states will retalerate and impose sanctions. china will retaliate (inaudible) you should divest of all investment (inaudible) have in china. (inaudible) 38 year member of (inaudible) >> thank you. >> thank you. we have no in-person public comment at this time. reminder to any

callers to press star 3 to be added to the queue. moderator, do we have any callers? >> madam secretary, there are no callers on the line. >> thank you. hering no calls, public comment is now closed. >> public comment is closed. madam secretary, please call the next item. >> item number 6, action item. approval of the minutes of the july 14, 2022 retirement board meeting. >> motion to approve. >> motion made by commissioner thomas and seconded my commissioner hellfond. madam secretary, call the first speaker. >> thank you. we have no in-person public at this time. any callers, press star 3 to be added to the queue. moderator, are there any callers?

>> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. thank you. public comment is closed. there is a motion by commissioner and second by commissioner heldfond. madam secretary, please call the roll. [roll call] >> we have 5 ayes, motion passes. >> wonderful. call the next item. >> item number 7. action item. consent calendar. >> have a motion to approve consent calendar? motion made by commissioner heldfond and second by commissioner bridges. we'll take in-person public comment first.

seeing no in-person public comments in-person public comment is closed. please open the phone line madam secretary. >> thank you. we have no in-person public at this time and any callers press star 3 to be added to the queue. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is closed. >> public comment is closed. motion is made by commissioner bridges. right? no, heldfond and-right. commissioner heldfond and second by commissioner bridges. madam secretary, please call the roll. [roll call] >> thank you. we have 5 ayes, motion passes. >> wonderful. please call the-motion

passes. please call the next item. >> item 8, discussion item. chief investment officer report. >> wonderful. we will take in-person public comment first. in-person public comment is closed. please open the phone lines for on line callers, madam secretary. the cio report did wept to do a presentation before public comment? >> okay, we can do the presentation first. mrs. romano. cio. >> great. thank you. in the cio report today we have the (inaudible) to tell on

board approved funds that since closed and the cio plan value. we have a lot of topics today so i intend the cio to set the table for those conversations and i'll start by walking through those slides that i have in the presentation. really i think i have a lot of (inaudible) to give a picture of the market but if you want to know what is going on it is volatility. that is what is going on in the market today. we had a rebound in the market in july and part of august and then we had a reversal and so two days ago, tuesday we saw the worst day in two years on higher then expected inflation and i would expect we will continue to see volatility. some days up, some days down. year to date, through tuesday which again was a rough day in the rkt mathe dow was down 14, the smp down 17.

likewise, where the market is sticking for risk the 10 year treasurer is tied for the year. this is two year is the highest since 2007. so what does that mean for us? we can go through statistics but what it means is the market will be volatile and diversification across asset classes and within asset classes will very much continue to be important. we can see that when we slip to the next slide which looks at the performance is calendar year to date. i emphasize these are estimates. as you know valuing private markets on a monthly basis requires estimation but what we want to show and you can see it in the top right hand graph is that our portfolio continues to perform better not only then a equity portfolio but better then a portfolio diversified

across ecawithty fixed income and real estate market. some of this out-performance even though it is negative, yes no doubt a matter of lag in private market values, but it is also diversification that we got very specifically with some of the other asset classes which we see at the bottom of the slide. this is calendar year to date estimates asset class. we know it has been a tough market in public equities. we have seen a market where fixed income moved in the same direction of equities. the real assets have done particularly well. our private credit has done well and one thing in particular that i like to point out to you is we are showing absolute return at down 70 (inaudible) based on a estimate. we are starting to get the numbers in and that number would be much closer to a positive (inaudible) what we

are doing is striving to make sure we have exposure to things that are diversifying and (inaudible) are not credit exposure but provide the differentiation of return protection and we see in the tough market, all be now doubt a short period calendar year date, we are thinking long period, but it is nice to see that asset class is performing in line with what we want to in a challenging market. on the next slide what i aim to show is for each of the asset classes. what is an easy way to think why (inaudible) the way it was and this is the actual numbers one year through june 30. on the top slide our performance in the public equity group [difficult to understand speaker due to audio quality] what you can see is

the worse performing are things like (inaudible) and that's a drag on performance over the one year period. but, we have diversification and exposure to those other markets and that is why in some respects performance is between (inaudible) i also want to draw the attention to a index you may not be familiar with but helpful to describe the marketing, the stability (inaudible) are a way to capture sensitivity to economic cycles and include things like debt to equity roa and earning volatility and this is what happened in the market. you can see there is more stable (inaudible) did much much better then

the dynamic names, so these are all things we need to consider in our portfolio construction and asset allocation within equities but helps frame why performance was down 24.7 percent. (inaudible) fixed income. laid out everything from emerging market debt which struggles to the inflation protection in treasuries on the far right, which under-performed, but to a lesser magnitude and our performance fits between the range because we have taken the (inaudible) both return seeking aspect of fixed income and (inaudible) also the treasuries to generate liquidity. again, here we see the performance is in line with what we would expect. [echo] finally when we turn the page (inaudible) look at private markets not on this

frequency because you see the private market has done well and you can see that part of the reason we have is it provides inflation protection. it provides diversified return. it has rate exposure and you see that in seeing things like the performance of the commodity index or the real estate index but you see it in the actual performance which again are in the orange bars on that page where we see strength otof the real assets group, private equity, private credit and diversification from the absolute return bucket. (inaudible) [echo] i want to take the opportunity to share with you key things and observations as we look forward. it is a volatile market but we are long-term investors so we don't

want to get overly distracted by short term volatility. we want to (inaudible) find opportunities to take advantage of the volatility. we want to make sure the performance is in line with expectations during those periods. importantly, we want to continue to employ a robust construction process, so we can be bottom up, take specialist exciting managers with competitive advantage and look top down and make sure when we put all the managers together across asset classes we take risk where we think it will be rewarded and manage the risk for long-term. that is precisely what we are doing in the absolute return bucket making realignments to insure it is different from what we have in the other asset class. some will take time to make the realignment but think it will be additive to the overall return of the portfolio. it will

also help with liquidity as well. prioritization in (inaudible) continuing to implement and enhance decision framework. the investment staff here is incredible. it is a sharp group of people with robust processes. we want to document those processes, be clear where all the controls are along those lines and make sure we have a consistent approach in decision making so we could continue to make good decisions and evaluate the decisions we made for longer term. and finally, and this will be a lead into the liquidity discussion, we are very focused on maintaining our short-term luquidties and planning for a long-term luquidties and there is more to come on that. that's what i have in terms of performance in the market. i welcome any questions and can turn into the deals that

have closed. >> thank you so much. i called public comment. >> (inaudible) i can go through it deals that have been closed. >> okay, sure, go ahead. sorry, i thought you were done. >> so, there are a number of deals that have been approved at the board in closed session and i will go through those now. the sfa annex fund at the board meeting in february 10, 2021, the board approved in closed session investment of up to $100 million to sustainable asset fund 3 and saf annex fund. first committed $40 million to annex fund and closed july 18, 2022. the commitment is classified as infrastructure investment within the real asset portfolio. second, gcp secure

space property partners at the july 14, 2022 board meeting the board approved in closed session an investment up to $70 million to gcp secure space property partners. first committed 65 $65 million to the strategy closed august 5, 2022. investment is classified as rel estate investment within the real assets portfolio. third, arrow credit opportunities. the july 14, 2022 board meeting in closed session the board approved an investment of up to $70 million in arrow credit and related investment of $70 million to the arrow credit opportunities to (inaudible) closed august 5, 2022. this is a credit opportunity investment within the private credit portfolio. next, gen8 at the board meeting july 14, 2022 in closed session

the board approved investment up to $75 million to gen8 lp. committed (inaudible) classified as real estate investment within the real assets portfolio. (inaudible) the board approved investment of up to $300 million in prisedio loan. investment of $300 million in the fund closed august 8, 2022. the investment is classified as direct lending investment within the credit portfolio. and that concludes (inaudible) >> so, take in-person public comment. seeing no in-person

public comment we'll close that and madam secretary can you call the first online callers? >> thank you. callers, reminder to press star 3 to be added to the queue. moderators, are there any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. we'll close public comment. before we get into the item, what is the anticipated time for this item, number 9? do you think? >> it is a important topic we want to make sure to brief the board on so i would say probably a half hour. >> okay. we need a break for lunch? probably unless there is a short item we can

take in advance. we can just go ahead and take our break now and come back at 1 o'clock. that okay? we'll just-we will recess until 1 o'clock. this meeting is being recorded. we are resuming open session of retirement board meeting of september 15, 2022. vice president heldfond. >> thank you. you call item number 9, please? >> item 9, discussion item. annual liquidity management update. >> thank you. >> thank you. we'll provide a few introductory remarks and turn it over to anna who has done a tremendous job (inaudible) is central to us being able to achieve the mission of this organization and that's why it is a

really important topic for this board. it is wise to have annually present on liquidity management and is something to keepen mind any decision that directly or indirectly effect liquidity will probably have more impact on the fund then any one individual investment in a fund. i know this board recognizes the importance of liquidity based on the work you is done, approving a use of credit facility and leverage. with that, there are three things we want to accomplish today. we'll talk where we are today in terms of liquidity, the ability to manage through a stressed market environment. this as shorter term liquidities and importantly, we want to talk how we need to think planning for future liquidity needs. we know the plan is maturing. we know that over time

the out-flows to meet the payments will increase as a percent of (inaudible) and while this isn't happening overnight, it is happening starting in a few years because we had so man y investments in the private markets (inaudible) it is important to consider these issues and start to think about liquidity now in terms of asset allocation. think in terms of the asset liability study and think about it in terms of what are achievable long-term returns that are consistent with our ability to meet these beneficiaries payments and (inaudible) other liquidity needs. we as a organization as staff will continue to work to make this happen and going to work to get liquidity built into the asset liability study, think of ways we can enhance

liquidity or management liquidity within our assets classes and think as a first step with the board and introduction of the topic that will tie into some of the other themes today and into the future. with that, i would like to turn it over toana. >> thank you allison. good afternoon commissioners; staff, consultants, (inaudible) and members on the call. i would like to start thanking the board for establishing policies for comprehensive risk management and reporting and for supporting developing and implementing the risk management framework that use said multiple analytical tools and resources to pull it all together. in according with investment policy procedure s, staff monitors and reaviews

liquidity and cash-flow on a ongoing basis and also provides a annual update to the board. (inaudible) large investor in private market with a aggregate strategic allocation with (inaudible) private real assets and private credit of 43 percent. relative to this target, thecurrent allocation to private market strategies is at 53 percent of total plan assets or about $18 billion. in addition, spers has approximately $7.8 billion or over 20 percent of nae in contractual unfunded commitments to private market managers. and spurs does not control the timing on when this capital is called or when it is distributed. this

presentation (inaudible) on thecurrent manage oment spers liquidity. we also highlight asset plan maturity should a important consideration in setting the strategic asset allocation, longer term liquidity and managing through stressed market conditions. so, as you know, the risk management framework that we established, that's 4 years ago has 3 major pillars in the report to the bord on each of them annually. the first pillar is around annual review of asset allocation and every 3 years we go through a large asset liability study with napc, the board consultant. the second pillar is review of our risk exposures and whether we are compensated in

terms of where we take active risk and third is liquidity management update. with that, i like to start sharing the liquidity management review and look at the 3 pillars of the annual review process. you will see that on the right we start with forecasting pension obligations and this is a annual process and i would like to thank our (inaudible) also provides look at multiple scenarios and you will see in this presentation also look at results on forecasting our pension obligation not just this fiscal year, but also looking forward. that is the

right pillar. on the left, we review and forecast cash-flows from our private investments. again, man y thanks to cambridge and everyone on private case teams (inaudible) we continue working on incorporated review of what to expect in terms of cash-flow distributions and contributions from private managers. then we pull it all together and this is where there is a short-term view and long-term view. we pull it all together in the long-term view to understand if this is our strategic asset allocation to private. if this is out-pacing what does it mean to our liquidity needs going forward and how we are meeting that?

we also introduce a couple years ago longer term liquidity measures, such as liquidity coverage ratios as well as a framework that relates allocations to private assets and the spending needs. we'll review it later. that is the longer term review with asset allocations and liquidity needs. for shorter term, regularly we review the rebalancing needs. what capital costs we are receiving. how are we sending the cash monthly pension payments? what are the expected pre-payments and contributions? we pull it all together and we also plan where are we going to take that cash? how are we going to rebalance? we'll walk through it, but we also look at stress cases and base cases on the what do we actually have in

liquid assets. that the overview of the presentation and i would like to start on the right with the estimate of pension payments. you will see this is on page 22, this is what (inaudible) and genet (inaudible) shared with us and we share that with the board annually. a few points on the graph. you will see historically 7 years ago we were paying $256 million net, that is the in pension obligation. if you look at this graph, the green bars-these are the contributions from employ and employee the fund. the blue bar is down and negative-these are the pension payments. the net solid black

line is the amount of monies coming out of this fund and you will the amount of money to pension obligations 7 years ago was $256 million. this fiscal year 2023, it is 3 times that amount. $776 million. we did not grow the fund three times and though that does mean that the percentage of the fund going out to pay pension obligation is growing, and it is all most doubled. we were 1.1 in 2015 and we are at 2 percent spending ratio now. now, let's look at the estimates provided looking forward. just in 4 years fiscal year 2027, this net pension obligation is expected

to double to all most $1.5 billion net outflows. again, it will be wonderful if we double but in our assets, that is not the projection so that means that we are maturing in terms of net outflows in total. you see the blue lines are growing, and we also-because of the robust funding status, the net contributions from the employer and employees are going down. last year-a couple years ago the net contributions from employer was $1.25 billion. in 5 years it is projected to be $800 million. where does the difference coming from? it is coming from the fund. there is more

liquidity needs on the fund. let's look in another perspective and what does it mean to employer contribution rates? so, you see last fiscal year the employer contribution rate was all most 27 percent and now, projects to go to 9 percent by 2030. again, this means that there is less contribution going out contributing less money coming from employer and employees and more coming from the fund. what does it mean in terms of what we call spending rates or another way to name it is annual pension pay-out rate? this is the percentage of money that is going out of the fund . we

need to sell it and send it to fund pension obligations. as mentioned, 5 years ago it was 1.1, this year it is 2 percent and it is projected to reach 4 percent in short-term. in about 5 to 8 years. what does it mean to be mature, where is the (inaudible) paying more out of the fund. well, couple years ago with we were reviewing asset allocation and connecting our asset allocation with liquidity, we introduce this framework that we worked with our partners black rock and let me walk

through. there is a lot on this page and i want to make sure that we understand what is happening here because we use it as governance and guidance for our liquidity-long-term liquidity management. on the x axis, you are looking at the spending rate or percentage of net monies going out of the fund to fund pension obligation. 0-12 percent. on the y axis, this is the maximum allocation to private market. total private market. when you pick a number on this chart, you are fixing if spending rate and maximum allocation to private. what do we do? we take that point and we

run a thousand simulations through different liquidity conditions and see if our liquidity risk is in line with our appetite. how do we define liquidity risk? we define liquidity risk as inability to meet either capital costs or pension obligations. so, here we are trying to dig out what is the probability given the spending rate and given the maximum allocation to private that we run out of cash, we will not be able to meet (inaudible) pension obligation payment? that is within a 2 year timeframe. so, do we have enough money for the next two years under different

time, different conditions because we take a historical liquidity quigz condition and we also take a different basket out of private market funds. so, you will see that the in green, if that point is in green that means you met your liquidity risk, you met your liquidity condition and you have sufficient two year liquidity needs under all simulations that we run. under all thousand simulations. that is the definition of the green conservative area on this chart. the caution area, the light blue means that there is more then 0 probability that you will run out of money, but it is less then 5 percent. so, that means that in less then 5 percent of the

simulations, but at least one we ran out of money and we are not able to meet a liquidity call. the danger zone means the possibility you will run out of money over the next 2 years is greater then 5 percent. so, that is what we are looking at. let's look at the older cases. imagine we are looking at the fund with 0 spending rate. that is we don't need to contribute to pension obligations or any other obligation. even there you see that if the maximum allocation to private markets is over 60 percent, you are getting into caution zone and you might be able under some conditions not meet your liquidity needs over the next 2 years. let's look on the e

other side. imagine your spending rate is pretty high, 8 percent. it doesn't mean you don't allocate anything to private, but you can probably still allocate 20percent of your fund to private market managers. where are we? as i mentioned 5 years ago, we were closer to 1 percent spending rate. we are now at 2 percent spending rate. we are targeting 43 percent, but we are at maximum of 53 percent right now, so not only are we moving to the right and our spending ratio increases, we are also at the same time is due it current market conditions have a higher allocation to private. we are still in green, but we are

hitting and with the spending and liquidity out-flows from pension obligations we just reviewed in 5 to 7 years we are going to approach 4 percent and at the same time with current pacing we will be staying closer to 60 percent maximum allocation to private and that (inaudible) in the zone where the probability of us running out of 2 year liquidity is about zero. let's look-that's what we reviewed how we work with (inaudible) work with genet and make sure we understand the estimates of the pension obligation and we look at the longer term assets liability studies and make sure that we understand how

to connect it. now, let's look to the left and i'm going to walk through that fairly quickly, because this july our investment private investment teams in cambridge reviewed multiple scenarios and pacing analysis and cash-flow with the board. i love to review that historically with the contributing quite a bit to our private market investments. that's on purpose. we do believe that that's where we can have higher expected returns and we are delivering higher returns in a liquid asset class. what does it mean? in the previous 5 years, 2016-2021, on average we had to sell over

$600 million in public assets and move that to private assets. that is excluding pension obligation payments and everything else that we talked about. that is just rebalancing of liquid within the portfolio that has been going on the previous 5 years and last year you will see we are starting to build a more mature private equity and real asset program. the gnash cash out-flow was more flat, so it was one of the best markets last year and we benefit ed from that. we also see commitment pacing over the last 7 years averaging (inaudible) as cambridge presented, that is the overview

for this year. the pacing and cash-flow for this year. you see the pacing for this year, we are targeting over $3 billion of net commitment this year and these are calendar years. in this case we expect positive, over $600 million in net distribution. however, we worked with cambridge and our investment team, private investment teams and we realized that currently the market conditions are more challenging and we designed what we call a (inaudible) or no growth scenario and we manage our liquidity based on this scenario. under which we expect to send about $400 million net to private

investments, and we also look at the (inaudible) stress condition and under this scenario we can send up to 1.4, $1.5 billion in net into private asset classes. one thing to take a look at and realize that this spread is (inaudible) 600 in distribution to $1.4 billion in spending to private assets. it is more then $2 billion, what i call the underwritten option an our cash. how do we manage it? there are multiple ways we manage it. we introduced with multiple support with the staff and our consultants. one of

the ways we manage it is that we have credit facilities and the credit facility we established a couple years ago and we updated up to $600 million or 60 percent of cash (inaudible) will cover next item, this is something that means that we dont have to hold the $600 million just to make sure that we can meet an outside capital call. we have the cushion that we can utilize. this is a facility we don't pay for unless we use it, and when we do use it the cost is about 2 percent annualized and we are annal charged for the duration and amount of the cash relief. it is very

efficient and very flexible and we do utilize it annually. reasonably utilize it in anticipation in june in anticipation of july employer pre-payment. another way we manage liquidity is through adjusting leverage. in the beginning of last fiscal year, we had no leverage. we will still working on making sure we have proper reporting and implementation. in the beginning of this fiscal year, our leverage is 1.8 percent of the total plan. what does it mean? first of all, i like to remind that we target 3 percent policy leverage. we are adjusting it lower, because we do feel that we have a higher liquidity needs and they are

over-allocated on the liquid asset classes. what we have done over the past fiscal year to manage liquidity needs, we sold actual physical treasury bonds and used the proceeds to pay for capital calls and pension obligation and we maintained the exposure to (inaudible) treasury index (inaudible) next i like to review the way we think about what is it we actually hold. what are our liquid assets and how do we manage it. we manage it in different tiers. what you just seen, we do have an ability to plan quite a bit in our capital calls, outflows. we at least know where we need to stand and also

how pension payments. so, as a result, we have a annual review and say this is how much cash we need to raise over the years, this is the plan how we are going to raise it. that much for public equity, fixed income and absolute return. we sit down with each asset class team. they always prepare a base case scenario how much they are going to redeem and contribute to the liquidity needs and stress case scenario how they are going to add to liquidity needs under stress and they do present it to the board in march or april during the investment committee strategic review of each asset class. internally we put it together in terms of tier, 1, 2, 3 and 4. tier 1 is effectively

what can we-how much cash can we raise within one month. these are the separately managed account within public equity and public fixed income. tier 2 is what can we raise first quarter-(inaudible) between a quarter and a year. this is annual liquidity need and tier 1-3 is what we consider liquid for our planning purposes. and tier 4 is the money that will take longer to redeem. we do review it, we do plan our (inaudible) but that is something that goes into the multi-year liquidity forecast. where are we as of fiscal year end? you will see that we have $8.2 billion in tier 1 .

we can raise more then $8 billion in less then a month. this is sufficient liquidity and within a year we can raise more then $12 billion. $12.4 billion or 37 percent of the total assets so we have sufficient liquidity, however, if you compare our liquidity position at the end of this fiscal year, 2022, versus a year ago, the liquidity picture deteriorated because we had more then $16 billion in liquid assets a year ago, or all most 50 percent. what happened? well, as allison described and you will hear from allen martin that there is a strong market dislocation during this fiscal year. public equities are down all most 25 percent. our fixed income including treasuries is down all most 11 percent. at

the same time, because of the evaluation and strong performance in the been ginning of the year, the private assets are up. private equity you will see allen report is up 14 percent. real assets are up all most 30 percent and private credit is up very solid 10 percent. as a result, the percent of the liquid assets increased to 63 and the percent of liquid assets decreased to 37. and that's-so, let's see where we stand in terms of what is going to happen if there is another market dislocation, how is it going to effect our liquidity position and do we have enough? these are two stress tests. one is a instuntaneous market downtown one standard

deviation. the annual volatility estimate from napc so it is 18 percent down in public equities and i believe about 7 percent in public fixed income. you will see that under-and we don't adjust private, because it is a instutaneous repricing. then we have about a third under this scenario in liquid and the rest is in liquid. that means it will take us more then a year to collect that money. and another scenario that we would put together is what happens over 1 year when we have to pay $776 million out of the fund so we have to sell that, (inaudible) and also there is a one

standard deviation repricing, but the repricing on the private is lag so it is half standard deviation. we are about a third of the fund in liquid and 2/3 is liquid. i think that is a fair analysis where we are in terms of kind of this liquid versus liquid split now. we ran a number of other scenarios and i will say that i will skip through them. there is a lot more. i will say that on the strong market (inaudible) there is more stress on liquidity, but we do have enough liquidity. it is more of what we are left with under this type of stress test. next we look at longer term liquidity measures and what we find longer term is over 3 years. if you remember couple years ago we have

(inaudible) liquidity management framework to introduce what we call liquidity coverage ratio, and the question we wanted to address in this measure is, does the plan have enough liquid assets to cover cash-flows in the next 3 years? so, to address this question we are looking at the lcr, liquidity coverage ratio where in the-on the top, we look how much liquid financial assets do we have, how much do we expect in distribution from our private and how much do we expect an employer and employee contribution to the fund. that is our numerator. on the denominator, we look at the benefit payment, what are the expenses, how much do we expect in capital calls for private assets? and so, if it

is less then one that means we dont have enough liquidity for the next 3 years. if it is close to 1, it means we do have it, but we will run out of most of the liquid assets by the time we are done, and if it is around 2 that means we will stay steady state. there are a lot of numbers. i'll walk you through in base scenarios. that is when we do receive quite a bit of distribution from our private equity. we are about 1.9 and we have a good liquidity coverage ratio and enough assets to meet plan obligations over the next 3 years. then we look at the stress scenarios and we put together the matrix of stress scenarios where if you look at the columns we

have base case in terms of liquid assets and we stress assets, what i call one standard deviation down, we take a annualized volatility and haircut all our liquid assets by one standard deviation. and then the last column we haircut liquid assets by two standard deviations. (inaudible) base case distributions from pacing that we worked with our private markets and cambridge, no growth case. this is the moderate stress case we are managing right now, and then it is strong stress scenario and you see when we combine the real stress (inaudible) more compromiseed of moderate and extreme

stress cases. again, we have enough but if you look at the scenarios we put together in detail uncovering the coverage ratio in the pending we might end up with a fairly low liquid asset balance up to such a stress test. what can we do? there are multiple ways to manage liquidity. we are working hard to deliver returns and if the returns are good hopefully that will help cover more. the other part is looking at the discount rate. the discount rate drives the net outflow

of monies out of the fund into pension payments, and you see the estimate that it does help. it helps considerbly, especially over long-term. that means we can allocate more to higher returning asset classes. here is another way of looking at it. you will see that here we ran this scenario where in orange it is 7.2 percent discount rate and in green it is 7 percent discount rate and blue, 6.8. and you will see that by 2030 if we-in 2029 we actually are below 3 percent if we discount rate is reduced to 6.8 percent, then we are below 3 percent spending rate and if you remember with our

liquidity management and asset allocation framework, there is a big difference between 3 percent spending rate and 4 percent spending rate. this gives a lot of flexibility to allocate to private assets that we do expect and have been delivering strong returns. and so, that's where this return allocation and expected returns and the discount rate plays into. also put together another interesting way of looking at it high discount rate leads to high uncertainty around net cash flows so the lower discount rate helps manage the cash flows with more certainty. i'll conclude, also man

thanks to janette we are in very good funding status. (inaudible) even with 7 percent funding-7 percent discount rate our funding status is over 100 and 6.8 it is over 98 percent, so at the result if we allow ourselves a little more flexibility on liquidity management, we give ourselves more flexibility around strategic asset allocation to higher returning asset classes. see if there are any questions. >> excellent presentation. >> really informative presentation. thank

you. >> thank you. >> this is discussion item obviously. pros and cons of changing the assumed rates of return. convincing the employer and employees that allowing us to maintain a higher level of liquidity is (inaudible) put before us. will help us be a better smarter more successful investor, which goes to getting the contributions down. that is part of the argument we have to be prepared to say. we are not just raising liquidity, we are not trying to lower the discount rate just to get more liquidity. they go hand in hand if you want to be a successful investor. that is a observation to share. the leverage piece that we added for staff to maintain liquidity and pay-off, it isn't so much there is

additional bit of risk to that, but in terms of figuring how much liquidity is dependent on the leverage limit, i still not quite understand. just going to take a while to instruct on that stuff. the question of why not raise the leverage limit from 5 to 10? will that give us more liquidity or not? >> not necessarily commissioner driscoll. it is a excellent question. the small part of liquidity helps us manage around different edges and in allocation. the 10 percent actually will increase risk, and if you have seen where we are with maturing plans, we also need to start thinking about reducing risk. so, 10

percent will add more to volatility then it will add to our flexibility. again, we can share the details, but this was our analysis that we ran with a apc and presented. because at the time of (inaudible) if (inaudible) we also need to budget more in terms of margin calls, and so that's why we felt that we ask the board that going up to 5 percent it will be better so we might increase to 5 percent going beiand 5, we feel that will actually introduce more risk that is adding to the flexibility in terms of managing liquidity. >> each of these has pros and cons whether it increase liquidity or contribution rate is down. not to tear

your point apart, but there is a reason why i notice when the general partners remain level of revolving credit to close deals as opposed to calling from us. i'm concerned about there contribution rate and concerned about the real rate of return we can achieve. we have to start shifting funds in different asset classes to get more liquidity or is the result-the benefit may be more liquidity but if it means higher contribution rates we have to tell the employer that. every one of the options and assume you probably considered man sweeney more then what is reflected but you think this is the best, you and the investment team think this was the best for the fund and appreciate that thinking. i'm trying to make sure we weigh all the pros and cons, because it isn't just the immediate need but long-term need as

well. y more then what is reflected but you think this is the best, you and the investment team think this was the best for the fund and appreciate that thinking. i'm trying to make sure we weigh all the pros and cons, because it isn't just the immediate need but long-term need as well. >> any other questions? commissioner thomas. >> thank you. my question has to do with the funding ratio. sorry, the discount rates on funding on slide 24. you mentioned the impact on risk and what i'm really looking at is how aggressive these assumptions compared to our peers and i don't know if you know off the top of your head but how agressive compared to our peers are 7.2 assumption, 7 and 6.8? >> this is excellent question and ciren is going to present on that and (inaudible) given this liquidity that i set up, we do need to start

adjusting strategic asset allocation to private assets and if we do adjust the private assets strategic asset allocation, this assumption becomes unreasonable. with the current asset allocation, they are on the top of reasonable range and you will see ciren presenting more on that in a hour or so. >> thank you. >> we are at the higher range of assumed rates of return as we delayed lowering ours over a year ago and never went as high as others but at the same we have more of the illiquid portfolios-there is lot of factors why wegot to this point. >> additional comments? we should

take public comment. no in-person public comment so we can close that. madam secretary, any online callers for this item? >> thank you. reminder to any callers to press star 3 to be added to the queue. moderator, do we have any callers? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. public comment is closed. madam secretary, please call the next item. >> item 10, discussion item. annual review of the sfers security lending program for fiscal year ended june 30, 2022. >> (inaudible) >> so, i think kirk will present the review. the team has thoughtfully implemented this program and to incapsulate it in

onesentance the goal is to generate incremental return but do so in a way that truly minimizing risk, so with that, i'll turn it over to kirk. >> i cannot hear him. >> you are muted.

sentence the goal is to generate incremental return but do so in a way that truly minimizing risk, so with that, i'll turn it over to kirk. >> i cannot hear him. >> you are muted. >> if you can't figure it out i can take it over. >> can you hear me? >> we can hear you. >> wow. my apology. spend two hours preparing and look what happens. commissioners, good afternoon. i will spend the next few-month providing the update and review of sfers securitylanding program for fiscal

year ending june 2022. i am joined by (inaudible) anna along with our teams are responsible for overseeing the security lending program. we are joined by mike (inaudible) serves as vise president within the security finance group. many thanks to anna and mike preparing the material i will review and a few slides in i will have mike comment on trends we see in the security lending landscape, particularly impact of rising interest rates and also impact that the increase volatility allison noted at the out-set we see in the capital market over the last 6-9 months. for those board members who are somewhat new to the concept of security lending, the market practice where sfers lends stocks liquid credit and treasury

securitys to provides collateral in exchange for securitys and pays a fee for the transaction action and that collateral can be cash or non cash. (inaudible) receive a rebate from the lender, us and the spread between the reinvestment yield on the collateral and the rebate rate is incremental revenue to sfers. i will share my screen. everybody can see my screen? so, as most board members know, february 2020 sfers reinstated the security lending. features of the program are 3 fold and represent a great leap

forward in terms of risk management and infrastructure. first arrange a program with dual indim nifiication. the collateral is managed at a separate account and (inaudible) mirror those of money market funds. at the time we established the program in february of 2020, our estimates were that sfers had somewhere between 6 to $8 billion of lendable securitys and again those securitys are asset in separately managed acountss across the public market platform. we estimated about any one point in time about 20percent of the securitys would be lend out and earn revenue around $2.3 million annually. picking up pennies but it is incremental income to the pension plan. turning to the last fiscal year, we

are pretty much on target in terms of revenue and utilization. we earned about $2.7 million for fiscal year and on average $6.8 billion of our securitys average we had $6.8 billion available which 27 percent utilized which is higher then what we estimated and i'll speak about that in just a moment. as we noted and as aware we did expand the cash release credit facility from $250 million to $600 million and we did invoke that or call it for approximately 4 days at the end of the fiscal $4 days at the end of the fiscal year borrowing, 120million. in addition, we extended the range of acceptable-of collateral and brought equity basket and (inaudible) and we added (inaudible) collateral accounts and added ficc

clearing relationship for the repurchase transactions. in terms of our turning here to our revenue, much like the broader sfers portfolio this fiscal year was the tail of two halves. the first half of the fiscal year, so june-december you see we were earning $800 thousand, $700 thousand but as the volatility in the market picked up in the new year, volumes and our income dropped opand i'll have mike speak a little about what that volatility-why lending volumes decreased. high volume and the high fees earned in the first half of fiscal year we ended up earning $2.7 million. overall as noted the utilization rate was 27 percent in the aggregate, higher then what we estimated but as you note on the

chart, utilization within public equities and liquid credit actually was quite low and again this was a consequence of the volatility in both of the markets but there was enormous demand for the treasuries and portfolio. average 76 percent of our treasury portfolio was lent out so average 27 percent of the lendable securitys were out the make up of last year was a little unexpected with vast majority of our utilization occurring within our treasury portfolio. i will ask mike to comment about the trends we saw in 2022. again, referencing volatility in the market place with credit or public equity. lending volumes slowed down considerbly, and this will be a good thing for us, rising interest rates increased the

reinvestment spreads. i'll pause if quou you can give brief comments 2 ing thes, decreased lending industry wide and comment on brief tournaments the impact of rising intrest rates will mean for sfers as alander of security? >> thank you for having me today. pleased to get to present to you. i was hoping the third year of our lending relationship i would doit in person but i will wait and buy the plane ticket the next year i suppose. to answer kirks question, a couple things. historically, security lending activities is driven by volatility and there is a few reasons for that. one of them is that investors across the board want to hedge their positions in a volatile environment and security lending allows them to do that in a number different ways. two, when you look at-sorry, lost my

place-when you look at environment, you tend to see opportunities on the downside or some managers might. volatility drives our business, but when we go back to beginning of the pandemic, a lot of things upset that paradigm and that historical volatility security lending opportunities and really the onset of the pandemic with so many people trying to get to home, work from home they were not able to take advantage of other things they might have. you go to summer 2020 with the social unrest we saw and that volatility did that translate into lending revenue and you follow on. market event after market event and the beginning of 22 when we thought we were getting back to normal with the invasion of

ukraine, time after time what we have seen is that dealers are really and investors in a lot of ways are sitting on the sidelines not choosing to get involved and place their bets and that bears out when you look at the feds reverse repurchase facility and you have well over $2 trillion sitting there that can otherwise be invested across the board. you really have seen a lot of money sitting on the sidelines. that isn't to say there are not pockets of opportunities throughout the market but really it has been the exception and not the rule in terms of what we see in our industry. when you talk about interest rates and rising intrest rates, in our business that is a good thing. security lending depending on the type of trade can be and could be a spread creation exercise so as interest rates are rising, the cash

collateral that kirk mentioned we invest, the ceiling goes up. the amount of money we can make for you can go up. the spreads are compressed with the fed cut rates to the bone beginning of the pandemic, now we are moving in a positive direction that is growing the spreads and growing the revenue we can create for you. >> the following slides, 7, 8 and 9 i will not cover. commissioners you have these in written form or electronic form. a lot of detail. it is month by month information that shows our returns, our spreads and earnings. if you have questions, pleased to answer them but will not cover them here. this is a important slide that summarizes our

collateral condition if you will. through the course of the fiscal year we lent $1.37 billion of our securitys through over 1900 individual loans and notably the program was highly over collateralized. the collateral we received as a percentage of what we lent totaled (inaudible) collateral we receive. to the discussion earlier about interest rates, the isis a summary of our cash collateral and key take away, i noted we have very conservative guidelines that govern the collateral portfolio. the cash is invested low duration high quality paper, weighted maturity at end of fiscal year is 83 days, the portfolio was a instrument that rated a or above. it is hard to see here at the top yellow

highlight there notes the yield, which is 1.77 percent. i looked at the presentation we provided the board a year ago, that was 19 basis points so to mike's point, increases in interest rates will benefit the income we earn from this program. given it is near certainty the (inaudible) 75 basis points soon and we expect this trend to continue. to that point, you could see the increasing reinvestment yield to high inflation or as a consequence higher investment rates or higher intrest rates. (inaudible) extraordinary partner for us. i noticed initiatives mike shared with us that is going on within the security lending plat form which include enhanced interactive reporting capability which include esg reporting so we will be able to do esg

scoring on the non cash collateral and purchase. the first organization to do some lending by way of distributed ledger technology. that is something we are taking or participating in but it is notable achievement and the group continues to improve on their analytics. so, i'll pause there and shut down the presentation. commissioners, turn it back to you for any questions: >> one question about the program. (inaudible) more cash and not a major investment operation, but those securitys that have been borrowed from us, i assume they are not available for us at that point in time to sell if we needed to sell for liquidity purposes? >> anything is available to be sold at any time. you receive contractual settlement of the proceeds. your managers will receive

the proceeds to uninvest but that is whether something is online or not. >> it is critical for us our managers are not effected by the security lending program and to date we have done a lot of transactions both by way of active managers and raising cash to fund certain liquidity needs and haven't been issues with securitys lent so no, this does not prevent the managers selling those securitys. >> great. the answer was no therefore there is no negative impact on the liquidity needs? >> correct. >> thank you. >> (inaudible) [echo and difficult to understand speaker] very strong. my question is, i go back to the utilization

(inaudible) >> great question commissioner. there is a couple things. this is one place where the regulations that have come into place since the financial crisis in 2008 benefited (inaudible) a lot of organizations institutional investors need to meet metrix such as liquidity coverage ratios and to do that they need to hold a certain amount of assets have to be considered high quality and liquid. the easiest way for somebody with a lot of stats on hand to do that is to borrow your treasury [interference in the background] that is really where that is driven from is

(inaudible) >> if i could add commissioner. we also [difficult to hear speakers] to put together the documents for ficc, so that means that mellon is sponsoring that to go to clearing and treasuries and as a result we are able to have access to a very broad clearing to lend our treasuries and that's what also helped this year. >> thank you so much for that explanation. (inaudible) thank you so much. >> any other

questions, commissioners? okay, great. madam secretary, since there is no in-person public commenters in-person public comment is closed. anyone on line? >> reminder to callers to press star 3. moderators do we have callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. public comment is closed. we will go to the next item. madam secretary, please call the next item. >> item 11. discussion item. report on investment performance for the retirement fund for the quarter ended june 30, 2022. >> do you want to introduce or i'll just go ahead? or allison. >> [multiple speakers] >> allison, did you want to comment? >> no, please go

ahead. >> okay. i'm allen martin for the record, general advisor to the fund since 2015. you have before you the second quarterly performance analysis which importantly contains the results for the fiscal year 2022. allison already mentioned that since june 30 the markets have been extremely volatile. with the s & mp since then up 3 and a half percent but that is after a 8 percent job monday when the cpi results were announced. i will not spend a lot on the market environment but on page 2 you get a very clear snapshot what is going on in the market and again, it is 3 themes. one, slower growth and you see that in the top gdp results for the second quarter are in, minus 9 percent. you may recall in the first quarter they were down 1.4 percent. many

economists would say two caurt quarters in a row of negative gdp means a recession, but if you look at the employment rate and unemployment rate we continue to have job growth in the united states and unemployment is particularly low. that generally is a trailer indicator not a leading indicator. the other big theme is inflation. it is higher for longer then people have suggested. as you know on tuesday, the result came in at 8.3 percent. the market expected 8.1, so it was only off by.2 but that sent the stock market into a tail spin. federal funds rates, when people are confronted by inflation, they need to earn more money on their fixed income holdings and therefore interest rates rise. as of today, the federal funds rate is 3.41 versus the 3.1 at

the end of the quarter, so again, we are going to see a continuation of rising interest rates and generally with slowing growth and rising interest rates that is not good news for the market. if we go to the next page predictbly from a market environment standpoint if you look at the quarter, which is the far left column, there is a lot of red there and only 3 month bills real estate and private equity which still reflect 331 valuations are positive. for the year you see the same results but marketedly higher returns in higher markets whereas, we heard earlier san francisco is particularly invested. i don't normally talk about the difference between value and growth but if you go down the page and look to the run to russell 1,000

growth versus russell 1 thousand value, as the commissioners know, our past success in public equities has largely been due to taking concentrateed bets in high growth sectors like bio tech technology and health care and you can see how differential those industries perform relative to value in this period. the outlook again looking forward is particularly murky. if you want to go forward one page, inflation we said for a while is with us and will continue at a high level and again, that will lead to rising rates, which alluded to earlier. if we turn to the punchline page for san francisco on page 10, -i'll wait till we get there. allison already covered the quarter, so i will focus on the fiscal year and longer periods. the top line here is time weighted

results fallowed by a ranking and peer group universe of 65 public funds larger then a billion dollars in size. before i go on i want to highlight and emphasize the extraordinary market conditions we are experiencing and your positioning of the portfolio. as we said earlier, inflation is higher then expected and going higher. leading to rising interest rates with more to come, despite concerns about slowing economic growth. if you look back, there have only been 9 quarters in the last 30 years where stocks and bonds have declined in the same quarter and 2 of those were quarter 1 and quarter 2 of 2022, and if we continue we may see a third quarter in a row. for the fiscal year ended 6-30, u.s. stocks were down 10.6

percent. global stocks down more, minus 15 percent and u.s. bonds, the "safe assets" return to negative 10.3 percent. that means a 60/30/10 globally indexed portfolio was off 10 and a half percent. the median public fund and you will see this number in the newspapers. if you look across all public funds, the median public fund was down 10 and a half percent. what we are reporting to you here is the median public fund greater then a billion. larger funds have larger staffs andtened to be more diversified and they withstood the down-draft better then others being down 7.54 percent. experts return in that context of negative 2.9 while it is disappointing because it is negative, it is still in the top 14th percent of all public funds. if we look at

the longer term numbers, which are on this page and on following pages, you'll see the 3, 5, 10 not 15, 20 and 30 year results for san francisco are annualized well above 8 percent and all in the top 1 to 2 percent of your peers, so if you went back and looked at this report for 12-31, we were the top performing publicfund in this universe on a 1, 3 and 5 year basis and virtually every other. we have given a little of that up in the first quarter. we will go into it, it was largely due to under-performance of strategies that have been extraordinarily helpful in the long-term but had a reverse when some of the growth industries full off in their return. the second line on this page is your policy index and that is what you would have returned if we were able to maintain

all allocations at target and all our managers delivered benchmark results. so, differences between the total fund return and policy index are either due to manager out-performance oreb or what we call selection or the positioning of the portfolio, being overweight things that did well and underweight of things that did poorly. between the top and second line you see in virtually every period you substantially out-performed your policy index. for the 5 year period the 9.8 percent annualized return compared to 6.89, that doesn't sound like a lot. it is 2.94 percent, but that number against a 33, $35 billion portfolio is $3.67 billion, so the

out-performance against policy for the 5 year period has added $3.7 billion to what you would have earned had you simply earned your policy. you'll also note you do better then a 60/30/10 index which is reported at the 4th line here. that is the result of a 60 percent allocation to global equities. a 30 percent allocation to u.s. bonds, and a 10 percent allocation to real estate and again, if you compare your 9.83 actual to the 5.66 you would have done have you simply indexed everything, that difference of 4.2 percent per year is $6 .34 billion in assets, so very very strong results in that respect. if you look to the two tables to the right, by policy this board has elected to have a more diversified policy,

less in public markets and more in private markets. that was purposeful and we would have expected the volatility of the portfolio in the volatile times would have been less then our peers and if you look at the standard deviation for the 5 or 3 year period, you'll see the volatility of your portfolio was in the bottom 6 or 7 percent of your peers. when you try to compare your results with others, many many policies are set to accept lower or higher volatility. simply comparing returns obsecures the true value of your out-performance. statusstitions and financial expert use the shart rareio which is return of risk taken t. is simply the total fund return minus the risk free rate which over this period has been close to zero. divided by

the standard deviation and you can see your sharp ratio 1.17 for 5 years, 1.11 for 3 years, top 1 to 2 percent of your peers, so very very strong risk adjusted returns. as of 6-30 the value of your portfolio was $33.2 billion. that is down from 37.198 billion on 12-31. that is a lot to dijust. i was going to turn to conformance to policy. any questions on performance? if not, if you go to page 12, this is the compliance page. as you know one of the board's most important duties is set long-term targets for the portfolio so what you see on this page is that second column is the percentage of allocation to each asset class as of

6-30, reflecting the effect of leverage. in other words, anna talked earlier about negative .18 percent leverage. that is why you see cash as notional negative 1.8 and that money was put into treshraries and public equities and so these numbers reflect that allocation. you'll see comparing the current with the interim policy all your allocations are close to target and within range with the exception of private equity which was mentioned earlier. a nice problem to have. we have done so well that private equities have out-paced everything else and now over the range. again, any questions about portfolio positioning? if not, if we go to page 14, this is just in dollar terms. you see we started the year with $34 billion, we paid

out 981-sorry, paid out negative $455 million. we had negative investment returns in this period of 981 taking to the $33 billion. ana talked earlier, if we divide that roughly $500 million a year in net pay-outs into the market value it is about 2 percent. i should say, that is not danger zone. most plans are within the 2 to 3 percent range, but if you look year to date number, that is where you start to see the product of our incredible success and being over-funded has lead to reduction in contributions and your actuaries tell you the most fundamental formula we are held to is contribution plus investment returns have to equal benefits plus expenses and so

if contributions are being reduced, that net pay-out number will be increasing through time and that begins to suggest the need not to panic, but the need to start to reflect the illiquidity of the plan, which is driven our success, and the contribution levels and to think about potential changes to asset allocation and potentially trying to increase the cash contribution in the fund. that is a topic for later on. i know ciron is here to talk about it, but all this reinforces the view that we have done so well that we are diminished contributions have to work the assets harder and that means less liquidity and more concerns about liquidity management. any questions about that? >> any questions? >> if not, let me close with some views

of competitive risk and return. there are several charts. if we go to page 15 this is simply a chart where each of those dots is a public fund greater then a billion, plotted against the return on the vertical axis and the volatility on the horizontal axis. you like to begin the higher return with lower volatility and san francisco is that dark blue circle, so well above median returns for the one year period. still a lot of plots above and to the left. the other points if you compare the dark blue circle with the light blue circle, the light blue circle is san francisco policy result and so the actions of manager selection and positioning have improved our results substantially over what we would have been had we simply been at policy. to give a little more context if we go one

page further to 16, same results but looking at 5 and 10 years and again, you can see how extraordinary san francisco's performance has been over the 5 year period literally the top 1 or 2 over the 10 year period, the top in this universe of 65 and again having achieve that with substantially less volatility then others. i'm going to skip over the floating bar charts, which lay these things out more in greater detail, and just go to page 22. all the results we just looked at are for periods ending 6-30-21. that means there is end period bias in the ult ares, meaning the most recent period is contained in every period we looked at, so here we laid out for you for each fiscal year going back 5 years how you did. what is truly extraordinary about

this chart is you'll notice in years that were really good, meaning those floating bar charts up at the top, you are at the top of those charts. meaning you are in the top 1 percent. look at the years that are bad. if a plan takes more risk to be at the top in a up market it tends to be at the bottom in a down market and yet if you look at your 2021 result, that annualized return is still in the top even in a down market. that has again been due largely to selection at the manager level. i am going to skip over and talk about atributions. if we go to page 23. the top line is the rolling 5 year performance above your policy. that is the light blue line and you can see from all most 2015, that

lines has been moving higher. the individual bars are quarter by quarter and so, the green bars are up markets, the red bars are in down markets, and you can see if you look to the far right, even in the down markets which the last 2 quarters have been characteristic of, you still did better then your policy substantially. and the last part of the commentary is just to understand why we did so well. if you turn to the next page, page 24, if you remember earlier we talked about your performance over the 1 year actual was down 2.9 percent. your policy was down 6.6 percent, and that means excess return of 3.7. what this chart does is break that excess return of 3.7

percent, which is after fees into how much of it was due to the allocation afect, meaning were you overweight asset classes that did well and underweight that did poorly, the allocation effect was a slight negative and you don't want a large allocation effect because that means you are playing a market timing game. what is left is the selection effect, meaning did you out-perform in each asset class the benchmark and if you go down that column you see a couple negatives the biggest public equity and again if we look at the detail your public equity results were less then the benchmark, again purposefully overweighting technology, bio tech, health care impacted more adversely then others. there has been recovery since 6-30 in some of those

components. under perfomance and absolute return, the benchmark there is liable or plus 5 so that is is a hard benchmark to beat and slight under-performance in real assets. the big drivers were private credit, private equity being incredibly high and everything else neutral. that is one year picture. if we flip to page 26, you get the 5 year picture and that is very similar. out-performance of 3 percent per year versus policy. i advice a lot of funds and i have none that have out-performed the policy by as much as you have. 2.9 percent of that is selection. that is 2.9 percent antm of manager selection effect meta fees, so over 5 years everything was neutral or positive with the significant drivers

being private equity, real assets and private credit. public equities were neutral, so this last downturn took away what had been a incredible driver of our success historically and-we didn't sell the equities we still own them, they are just valued at lower prices so there isn't a realized loss, there is a reduction in the value of those securitys, which we would expect to recover. that is all i was going to say on attribution. i can go into detail on the individual markets if you like, but again, i think what allison summarized the plan benefits significantly from a high allocation to private markets, particularly private credit and private equity and i want to highlight because a lot of people think bonds are safe. a lot of people think if i

buy a bond i can't lose money. in the last year you lost 10 percent of value in bonds and you have chosen a very substantial part of your portfolio to being private credit where you earned 10 percent instead of losing 10 percent. market weakness in the growth sectors of health care, bio tech and (inaudible) but again, you haven't sold those positions. lastly, the positioning of the portfolio is very much in line with your strategic targets and we think will hold up well if we continue to see near term market weakness. again, i would be happy to take comments or questions. >> allison, do you have a comment? commissioners, any

questions? >> (inaudible) >> okay. commissioner (inaudible) >> this is question you may not want to answer today but a discussion item. obviously we have a very good tolerance for volatility, yet it has gone down for couple reasons, one being overweight into private equity and continued increases in private credit, but also the absolute return. (inaudible), >> yes. >> we comfortable with the volatility and liking the results because of all the hard work and good selection efforts by staff. the question is, does (inaudible) come up with a position of the level of liquidity if the fund maintains? not expecting a answer today. it is long-term issue about whether or not we want to start lowering any of our asset classes. there are big shifts

because of denominator effect but whether or not we want to make a significant change. >> we are just kicking off the 2023 asset allocation study with staff and ciron and those are very important issues to look at. there is no one answer for every one plan. you're one of the few plans with the luxury being hundred percent funded, 98 percent of all funds are under-funded so it is nice problem to have but a problem never the less because contributions drop we have to work the assets harder and liquidity becomes a bigger concern. >> thank you. >> any other questions commissioners? thank you for that great presentation. anything else? anything else allison you wanted to add? great. did we take public comment for the item? no. seeing no

in-person public comment, in-person public comment is closed. madam secretary can you call speaker s on the line? >> thank you. callers reminder to press star lee 3 to be added to the queue. moderator do we have any callers? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is closed. >> great. public comment is closed. madam secretary, please call the next item. >> item 12, discussion item. san francisco differed compensation plan monthly report. quarterly review. >> thank you very much. (inaudible) >> if you unplug your microphone it will go into the-if you unplug that we can hear you.

now that you have your headset on. >> okay, thank you very much. so, good afternoon commissioners. it is wonderful to see you all here today. thank you so much for making the time. i providing a quarterly report to cover the 4 main pillar ozf the plan which investment marketing operations and the record keeper. the details are before you and after covering highlights i will briefly walk you through the overview deck which provides a deeper dive into participant trends and behavior. up first is investments. i will only cover a couple items here as more deiltas on the funds and the market will be provided by greg ungerman as part of the semi-annual performance update. the stable value fund increased the credit rate to 1.87 percent for q3. this is a 17 increase for prior quarter. this credit rate is guaranteed for the entire third

quarter and will be reset in q4. stable value is the plan largest investment $17 increase for prior quarter. this credit rate is guaranteed for the entire third quarter and will be reset in q4. stable value is the plan largest investment with over $1 billion in asset and experience the highest amount of new assets for the quarter around $18 million. the targeted fun manager is in progress. staff did hold semi-finalist meeting earl sweeney september and we are finalizing the details of the recommendation to the differed compensation committee next week. small update but taking a lot of time. for marketing we have been very bus y in q3 as we have many items. first is sfers annual state incert sent to all pension members in august. in the past we included a slip but this year featuring a full page layout. copy of the flier has been included in your materials towards the

end of the item and features qr codes for easy scanning so they can reach a counselor enroll in the plan or register for a webinar. we usually get a bump in activity with this mailing. ment as you know, the fee reduction took place june 30 and it was reflected in the q2 statements mailed in july. direct mail of the fee reduction was also sent in q2 and sample is included in the materials. this was timed with the 1 percent reduction in mandatory pension deferrals and the july raise. speaking of timing, october is fast approaching and that means it is national retirement security month. as a reminder, national retirement security month is sponsored each year by congress by bipartisan support. resolution (inaudible) "designed to raise public awareness of the various tax preferred retirement vehicles

increasing personal financial literacy and engaging the people of the united states on the keys to success achieving and maintaining retirement security throughout their lifetime". sponsors take this to heart and nr is rks m is a dedicated time to focus improving retirement outcomes. we are looking for ways to increase (inaudible) education against pitple fall october is the culmination of many efforts. you will find more deiltas of the compain in the memo but in short we create a landing page specific to enter tools and resources, we host webinars for women and this year (inaudible) and incentivize action. this year we are delighted to bring back our very popular in-person seminar after a 2 year hiatus flaum the pandemic. this will only occur one time in person on

october 19 during lunch time at the sf main library latino room. all attendees will receive a prize coming and upon completing entered into a grand prize awarded oen the spot so please mark your calendars to be there october 19 and make sure you rsvp when the link goes live october 1. staff also been working very hard to collaborate with other city departments to promote the initiative and aappreciate the partnership. hsf safety and other departments who agreed to spread the word. moving to operations, the board approved an amendment to the plan document on july 14 to include a special rule that allows the normal retirement age to be 50 for safety. this means that safety members are eligible for a special catch up contribution which can be doubled the annual maximum amount depending on under

utilized amounts. starting at age 47 for up to 3 years. finally, for the record keeper as you know when we transition to record keeping service in 2019, we also introduced managed accounts which is primarily for retirees. according to (inaudible) most american retirees do not have a draw-down strategy for income and retirement and say they aim to maintain our increase their level of assets. only one in 20 are strategically spending down assets. to meet the need the offering has income plus component designed it do just that. factor the years approaching retirement, transitioning into retirement and post-retirement. a new enhance ment is coming to this program that allows participants to choose more-choose how much of the portfolio to draw down so instead of all or none position focused on income, they now have the option to choose growth in the event

they have legacy goals or have their expenses already taken care of let's say through the pension benefits. this feature will be available october 15. (inaudible) transitioned to a leadership role in it at voya and wish the best in the new role. brian is doing relationship management over 14 years and we will miss him, however we are delighted to be working again with mr. bishop besteen on the call. he is also very seasoned and tenured. bishop has a wealth of experience with san francisco and we are fortunate he assumed this role. bishop, would you like to address the board quickly? >> sure diane. thank you for your comments. very kind. for the commissioners, i guess greetings again for some i met in the past during the rfp process and prior instances. look forward working with you. have big shoes to fill in

brian's shoes but he will be a resource for me since he is staying within the company so happy to reach out to him, rely on diane and her staff for guidance as we jump into isand getting used to the process going forward but i want to thank you for the opportunity and look forward working with you all going forward. thank you. >> thank you bishop. so, with that said commissioners if there are no questions on the memo i like walk very quickly through the attached board report. okay. can i have permission to share my screen, please? can you guys see it okay? excellent. thank you. alright. bear with me one second. let me

put it on--excellent. okay. so, sorry, am i too loud? i can hear the echo. >> it's okay. go ahead. ; and we have over 33 thousand participants in the plan. about which a third are retirees. this shows you the amount of assets in the plan right now as of june 30. it is about $4.2 billion, but the market has been in flux so as of the end of july we are already at over 4 and $4 and a half billion, so you can see we are tracking the assets. this is a good snapshot of the funds and investment. you see stable value as part of the update is the largest holding, 24 percent. the target funds are default investment and that is what we are in the rfp for now. that

is also about 20 percent and also we have a large index component. we have several indexes. we have 26 percent of the assets in invested in index funds so we have participants chooses a passive market strategy. here we go. this is a good news stor y we generally try to recommend participants choose a percentage to differ as opposed to dollar amount. often times people choose dollar amount because they divide the annual max across 26 pay periods so let's say that turns out to be 850 per pay period. but the problem with that is that dollar amounts don't get automatically escalated so when somebody does gets a raise such as say in july, that is not captured when is a dollar amount so what we have been doing is trying to focus on encouraging people to contribute through a percentage and you can see on the left that

is our entire population. the majority of them are a dollar of pay but to the right you see with the new enrollees a lot are choosing a percentage of pay. that is good news story as we are trying to promote best practices with participants. this shows participation trends which tend to flex wait. it depends on how many people are hired and how many retirees are retiring and at this point this is normal. we usually get a dip in q2 and we have here this slide is important to show you that (inaudible) are being taken and partial distribution phase so q4 of 2021 that is when the rmd are taken. the board should know at the end of 2022 in q4 you will see another spike. for those who are subject to rfd, if

they do not take rmd by the end of the year the plan will do that for them and send a check to the address of record. that is why you see a spike in q4. next couple slides show the roll-over dollars institutions are getting that money. some loan information there. we have a very very low default percentage rate, so our default percentage is about 1 percent. the general industry is about double digit so we are proud of the low default number. a lot work goes into that with follow-up and checking up on loa so that participants are aware of the missed payments and they can pay it back. we are actually looking-you can see the amount of loans are increasing particularly in this environment. as part of our plan document update in the future we will look to make changes to our loan policy. particularly making it a little easier for people to take loans. currently as it stands you have

to have a 12 month break between loans and so sometimes when people pay off a loan relatively quickly they don't like having to wait 12 months. in addition to that, if you default just once you are not allowed to take a loan again, so we do want to give people the option to potentially take anothering loan in the event they truly need to. there are other ways for you to access your funds through unforeseen emergencies and other distribution special cases, but this is what we are hoping to do to have people have better access to their money. the rest is just participant service level stats. you can see the service levels here. the amount of time it takes for a phone rep to answer calls. these are tied to sla in the contract so we monitor them to make sure that our participants get the best service. and local counselor activities. as we have pivot to the

virtual or hybrid environment and some departments are less apt to open completely we need to figure different ways to track productivity because if we are not getting one on one in person and not allowed in meetings and having group meetings, how else can we make sure the counselors are out spreading the word and boots on the ground. you see the number of phone calls and are e-mails added. the phone calls are important as also we have done a lot of special outreach during the pandemic as we look for different ways to have a reason to call participants regarding their plan. and the last section here i can just skip over. we have a full agenda so it is digital engagement if any commissioner has any questions on this we can certainly talk more about this at another time but this digital engagement summary shows participant engagement over the course of the year. you see about 20 thousand participant logged into the website. that is pretty good. that is about 60

percent and when ever they log into the website they have the option to use orange money, often times that triggers action. the customer profile is interesting. this is participant inputed data so the participant puts their salary and expected income replacement so it is directional. i think that really covers the high points. so, if there are no more questions on this i'm happy to move to the next topic. if there are, i love to answer them. >> any questions, commissioners? okay. seeing no in-person public comment, we'll close in-person public comment. you can call online public comment madam secretary. >> thank you. callers if you have not

already done so, please press star 3 to be added to the queue. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you, hearing no calls, public comment is now closed. >> public comment is closed. great. thank you so much for the presentation. >> thank you. >> please call the next item. item 12. >> yes, next item is 13. discussion item. review of sfdcp investment performance for the first half of 2022. >> thank you. so, for this item, we have our consultant greg ungerman on the line. they do a semi-annual performance review for the plan. is everything okay president? >> i want to see the length of the presentation. >> absolutely. we

differ to your pleasure on what you would like. we can do a brief presentation under 5 minutes if you like. >> that would be great. >> okay. certainly. mr. ungerman, you have our direction, so please proceed when you are ready. >> appreciate it. good afternoon everyone. i will make this quick. if i can share my screen perhaps that will expedite my comments to make sure we are all on the same page. thank you very much. so, as a always page 2 we provide a brief high level summary. there are 4 managers or funds and i'll focus my attention on them as i go through. just as a reminder, not going through this in detail. i just wanted to underscore the point. it was a

very difficult period in absolute terms for stocks and bond fell and that is implication on the target dates funds and importantly you see the 90 day tee bill just reminder you have a stable value fund that did preserve capital very well and really bounced back nicely. the last capital market page i'll show you is this page just to show interest rates rising and you'll see these red arrows as time has gone on. since june 30 which this report focused on interest rates have risen. the fed fundries is 2 and a half percent. in the timeframe the fund performed as expected in yields on the underlying market values are over 3 percent, so all that new money coming into the stable value fund worked out very very well on behalf of

(inaudible) in the interest of time, i'll touch on performance for the target date funds and that is shown on page 10. you'll see the different time periods at the top. we go from the last half year into june 30 last year 3, 5 and since inception. itened to focus on the longer term. you will see the fund and these are net of fees out-performed the custom benchmark in every category and that is a testament to the underlying investment core options offered within your plan generally added value over and above the benchmark returns. there is passive investment but also a lot of active investment and it is done nicely. just reminder, given the stocks and bond sell off so far this year it is only the third time in the history of the stock and bond market where for a one year period we have seen negative returns

in both stocks and bonds. the other two time periods 1931 and 1969. the offers within the plan you see a lot of green and reminder that means the fund is performing in the top half of the peer greep. the stable value fund doing quite well. 3 and 5 year returns over 2 percent and again, the underlying yield bounced back so we expect the credit rates to continue to rise as time goes on. just a note on the social equity, you see 4th performance. the fund doesn't have energy in it. it excluded. energy is the best industry year to date basis as a energy sector is up over 50 percent so that certainly is a expected (inaudible) the 2 managers of this page is the value.

you see third and fourth performance on the 3 and 5 year basis. this manager is really shown nice bounce-backs so far year to date basis for 2022 given the valuation displain doing what we expected and showing a nice rebound. on the growth side just note the magnitude of the under-performance. this has been the plan best performing fund and as noted earlier, given the sell off in the growth market particularly in tech and discretionary that under-performance is very short timeframe we expect on longer term basis will bounce back nicely. rounding out the core options on page 12 you note see a lot of top half very strong relative results on the 3 to 5 year basis. just keep in mind the real estate fund we did replace this manager back in 2020. the new manager has shown in

the bottom track record and done a very nice job in this period. the last page i was gee ing to cover just as reminder, these are the component funds that russell target date manager utilizes. these are not available on a individual basis to participants. we usually see a lot more volatility with these very specific funds on a longer term basis they have done very well. the one that is on watch list now is the wells fargo advantage. the name change will come through in the next quarter to all spring. they just missed by a couple basis points given it is a short duration bond fund. we don't have concerns on the ability to right the ship. the last fund on watch list is the active equity fund. that is a fidelity low price stock fund going through a manager

change. not effective until the end of 2023. we met with the new team, they continue to do good job and you will see their performance was quite strong over the short timeframe. i will stop and see if there are any questions and go from there. >> commissioners, any questions? great. thank you. thanks greg, thank you for the presentation today. seeing no in-person public comment we will close in-public comment. madam secretary, please call online callers for this item. >> thank you. callers, please press star 3 to be added to the queue. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you, hearing no calls, public comment is closed. >> great. public comment closed. we will call the next

item. >> item 14, action item. approval of prez dpnt's committee assignments. this item was continued from the july 14, 2022 retirement board meeting. >> allison, go ahead. >> sure. i can take this. this is the item with the committee assignments for differed comp governance investment and operation and oversight for the board review and approval. >> great. thank you. i have spoken to all of you on your feedback, so feel good about these assignments. if i can have a motion to approve this. >> so moved. >> moved by commissioner thomas, seconded by commissioner heldfond. we'll take in-person public comment. seeing none, in-person

public comment is closed. madam secretary, please open the phone lines for callers. >> thank you, moderators do we have any callers oen the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. close public comment. there is a motion made by commissioner thomas seconded by commissioner heldfond. madam secretary, please call the roll. [roll call] >> we have 5 ayes, motion passes. >> great. madam secretary, please call the next item. >> item 15, action item. amended schedule of fy2023 retirement board meetings. this item

was also continued from the july 14, 2022 retirement board meeting. >> great. i think it is pretty straight forward. third thursday of the month, 11 o'clock start time, and can i have a motion to approve the schedule for fiscal year 2023? >> second. >> heldfond, seconded by commissioner aj thomas. no in-person public comment so we'll close that. madam secretary, please open the phone lines for callers. >> yes, thank you. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. just looking--to make sure-i think everything looks good. okay. alright,

public comment is closed. motion made by commissioner heldfond and second by commissioner thomas. madam secretary, please call the roll. [roll call] >> we have 5 ayes. motion passes. >> great. madam secretary, please call the next item. >> item 16. action item. review and acceptance of the july 1, 2022 supplemental cola analysis. >> good afternoon, commissioners. we ask the board accept ciron supplemental cola analysis as of july 1, 2022 and direct retirement staff to

notify sfers retire sweeneys no supplemental cola is payable effective july 1, 2022. i like to note under chapter section (inaudible) period 526-4, for retirees hired on or after july 7, 2012, the previous supplemental cola granted july 1, 2021 will now cease and the benefits revert to the level they would have been if the supplemental cost of living benefit adjustment have been made. those retirees have been notified and there are 240 of those at july 1, 2022. >> great. >> it is an action item. >> i see that. there is a action to accept supplemental cola analysis of july 1, 2022 and direct

retirement staff to notify sfers retirees no supplemental cola is payable effective july 1, 2022. i have a motion? >> move to approve. >> moved to approve made by commissioner scott heldfond. seconded by commissioner joe driscoll. seeing no in-person public comment public comment is closed in-person. madam secretary, can we open the phone lines for caller? >> thank you. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. motion is made by commissioner heldfond and seconded by commissioner driscoll. madam secretary, please call the roll. [roll call]

>> thank you, 5 ayes, motion passes. >> great. madam secretary, please call the next item. >> item 17. action item. request to inclose combined charities campaign correspondence in september 2022 retirement allowances. >> thank you. i'll be brief. provide the background cht the board previously had approved inclusion of cor spandance in retirement allowances asking retired city employees to participate in the combined charities compain. we attached the letter proposed for 2022 and looking to the board to approve the request to include the correspondence. >> so moved. >> second. >> motion made by

commissioner driscoll, seconded by commissioner heldfond to approve request and closed combine charities campaign correspondence september 2022 retirement allowances. seeing no in-person public comment, in-person public comment is closed. madam secretary, can you open the phone line for callers? >> thank you. moderators, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. motion is made by commissioner driscoll, seconded by commissioner heldfond. madam secretary, please call the roll. [roll call] >> we have 5 ayes,

motion passes. >> great. madam secretary, please call the next item . >> item 18 discussion item 2022 review of economic assumptions. >> good afternoon commissioners. this is our annual review in accordance with the board monitoring and reporting policy. this item is discussion only. bill hallmark and ann harper are here to present the item. i believe that bill has been granted presentation. there we go. thank you. : >> good afternoon commissioners. this is our presentation starting the process of the valuation. we are reviewing the economic assumptions today. i want to get us started with brief background to where the plan is and what

our most up to date projections are. you saw some of this during the liquidity presentation, but we will ground our process in those projections. we have annual returns for fiscal year end 2022 that were about minus 3 percent. follow the extraordinary returns from 2021. (inaudible) investment returns gains and losses recollect over 5 years in the value of assets which is used to determine contributions. so, one thing we want to make sure you are aware of is even with the investment losses this year, contribution rates are still trending downward. they are not going down quite as fast as we had anticipated last year, but they are still expected to go down. current projections

assume all or other assumptions are met so these are not final projections where we will be with the valuation. we need to collect the data and do the analysis. we do expect some losses due to salary increases, but there may be other gains offsetting those losses. this is where we are. on the left hand side we are showing the liability as a gray bar and the lines are the assets with the funded ratio at the top. we are projecting on a market value basis we are still greater then a hundred percent at 103 percent assuming all other assumptions are met so we have to see where that comes out in the end. on the right hand side we are showing contribution rates after cost sharing. in the liquidity presentation you saw the same

figures before cost sharing. the cost sharing-we want to show after cost sharing because we are expecting member contribution rates after cost sharing to go down as well. however, this is very close to the trigger of whether contribution rates go down by half a percent or a full percent. that may change when we finish the valuation. these rates are going down. the big adjustments this year are we finished paying off for the 2017 supplemental cola. also, for 2002, proposition h changed that increased safety benefits. those combined to reduce the rate by about 2 and a half percent and the rest is really the

investment returns. the dark blue lines what we had projected last year in the valuation so you see with the investment losses that is having a impact as we go forward. with that basis, i am going to turn it to ann to get started on the economic assumptions. >> good afternoon commissioners. i will do a overview of the assumptions. we have two categories of assumptions. first the economic assumptions and we review those every year. they are price inflation, wage inflation, amortization growth rate and discount rate and those are not in order of significance. that crystal ball shown in the previous slide is very appropriate as we look to the future and what the future holds to set these assumptions they are very forward looking and not based on historical returns. the demo graphic assumptions we review

every 5 years and those are things like member individual behavior such as retirement and we look at deaths during that study and that wont be until 2025. it the economic assumptions adopted this year will go into 2022 evaluation which sets the contributions for the following fiscal year so fiscal year 2024. for context, we are showing here the history of the economic assumptions over the last 20 years. the yellow line is the discount rate from 8 and a quarter to 7.2 percent for the last year valuation so a little over a hundred basis points. the price inflation the dark blue line decreased by about the same amount, 100 basis points from 3.5 percent and now at

2.5 percent. the wage inflation assumption decreased more. gone from 4.5 percent 2021 to 3.25 percent in 2021. so, i will get to the punchline to share our summary of our recommendations for these assumptions and go with rational later in the presentation. so, we are proposing no changes to the price inflation wage inflation. the amortization growth rate, however we show a range for consideration for the discount rate changes since they are all reasonable and this is a very complex assumption. the recommendation for the discount rate is dependent on the capital market assumptions. we look at those first and those we get from nepc and those include the expected rate of

return on each of the asset classes and we also look at other investment consultants for comparison and we take those capital market assumptions and we apply them to asset allocation to come up with expected rate of return. and so, in light of anna's liquidity presentation, our recommendation is considering a potential reduction in that private equity allocation which would dampen the overall expected return on the portfolio. turning to price inflation. a little background on price inflation and how it impacts our valuation. we see here in this chart the foundation the price inflation is the foundation for all ort economic assumptions in the traditional building block approach. the current

price inflation assumption is 2.5 percent, however, even though price inflation is very important to individuals in the plan in terms of the purchasing power, the retirees, it has no direct impact on the cost of the plan, and that is because the colas in the basic colas are capped at 2 percent. since the price inflation is above that, we will assume a 2 percent basic cola for the retirees and even if we increased it to 3 percent or decreased to 2.25 percent it would have no impact on the cost of the plan. so, to reiterate what is most important about setting economic assumptions isn't the current price inflation but expectations for the future. it isn't just one year into the future, we do look more long-term, more

closer to 10 year or 20 year outlook, so everyone knows and been reiterated that we have historically high inflation, we haven't seen this type of inflation since the 70's and 80's around 8.5 percent currently and these expectations are expected to be lower in the future. mainly because the various reasons, but one of the most important ones is the federal reserve is expected to continue to raise its rates. we had 4 rates so far in 2022. there is a september meeting and speculation they will raise it again anywhere between 50 basis points up to another 3 quarters a percent, which will curb inflation. those expectations are starting to come down. this chart here puts these lower expectations into actual numbers and what we are looking at

is break even inflation, which is consensus of future inflation by investors. so, historically if you look bake back 5 years ago expectations for the future were around 2 percent, between 1 and a half and 2 percent, but when you look at today what those future expectations are for 5 year average annual rate and 20 year average annual rate we are 2.6 percent for both of those time periods. the 2.2 percent is a 5 year forward rate and what that is what the expectations would be 5 years from now if you look at the next subsequent 5 years. in 2027 what would the 5 year expectation be and that is even lower so we are expecting inflation to come down. other forecasts of inflation are shown here and as allison

said the key word is volatility which lends to uncertainty. on the left side of the graph you can see the range of expected inflation over a 10 year period and this is from professional economists from the third quarter of 2022 and this is the widest range we have seen in current times and that's due to different expectation s of how quickly inflation is going to drop. when you look at a shorter timeframe then 10 year, if you look at the 5 year forecast in this group of people, it is a wider range of 2 percent to about 6.8 percent. the next metric or survey we look at is the horizon survey comprised of over about 40 different investment consultants nationally and that is a much

narrower range of inflation expectations and what is shown here is 2021 survey, but we just got the updated 2022 survey last week and that range now is goes from 2.2 percent to 2.8 percent with the median being right at 2.5 percent, which is consistent with nep assumptions of 2.4 and 2.6 over the 10 and 3 year period respectively. lastly here what we show are the assumptions used in public sector plans. the column to the left shows the public plan and assumptions on a national level and on the very far right we see the california survey which just looks at california plans and the assumptions used are 2.5 percent and 2.75 percent respectively. so, we are not

recommending any changes, 2.5 percent still remains very reasonable and given the volatility and uncertainty and the fact it doesn't impact the direct cost of the plan we will leave that assumption or recommend leaving that assumption at 2.5 percent. so, the next assumption is wage inflation. wage inflation primarily effects the cost of the valuation by-because we use this assumption to apply to the salary increases for active members. the current wage inflation assumption comprised of two components. we look at the current bargain wage increases and after-those go out a couple years so the ultmal wage inflation is 3.25 percent after that so we propose no changes to this

assumption as well, but we are going to update the current bargain wage increases for police and fire. they collectively got a 6 percent increase as of 7-1-2022. most of those increases have already been incorporated into our last valuation back in 2021, so we are not going to see a big change in cost because of those increases, but the miscellaneous group just had a new mou this year and so that 7-1-2022 increase of 5.25 percent will be incorporated this year and as well as the fiscal year in 2024 increase of about 4.75 percent collectively, so we will see some slight losses in valuation because we were using 3.25 percent. with that, i'm going to turn it back over to

bill to discuss the discount rate. >> thanks ann. as you all know, the discount rate is the most powerful assumption and as we adjust it if we do so the expected return then we have increased contributions. if we increase we reduce the contribution. that is short-term effect. over the long-term it depends on the actual investment return and not what we assume because we adjust each year for actual returns in the cost structure. when we are doing-looking at it discount rate, we look at a few different spreads. price inflation is the real rate of return. the spread over the wage inflation is indicator of what it

will cost for our active members and we also look at the spread over the 10 year treasury rate, the risk free (inaudible) risk free rate. and that changed significantly this year. i think earlier there was a question about how your assumptions compare to others. this chart on the left shows a comparison to national plans. there is little over 200 plans in this data base as sfers is the gold diamond and the bars represent the range of assumptions used by other plans. we are currently just below the 75 percentile, the median is 7 percent. the chart on the right shows breakdown of these plans and you can see the vast majority are using an assumption around 7

percent, and the second most common is something around 7 and a quarter, so our 7.2 is right in that ball park. in california, discount rates tend to be lower so this shows a comparison to 39 california plans, and the discount rates used. our discount rate at 7.4, the last few years prior to changing it last year was the highest in the state. we now dropped slightly below the high mark and that is shown on the right. there are a couple plans at 7 and a quarter with the 2021 valuations. we are at 7.2, but there are a large number of plans that half the plans

are at 7 percent. they also range as low as 6 percent, so there's some range for the california plans. i think if you look back longer, what we have seen is that the yield risk free range or the yield on the 10 year treasury has been going down and it hit the low around 2020. our assumptions from 2000 on have gone down, but not as much, so we had to increasingly meet the risk free rate so the risk premium had to increase over this time period. with treasury rates bouncing back up that risk premium is back to a smaller level, but still relatively high historically, but

back to around where it was in 2010. at the same time, you have seen changes in broad asset allocations, and most notably recently is the growth of the private asset classes in order to achieve those returns and achieve that risk premium. but, as discussed throughout this meeting, as sfers has been extremely successful in that and so the net cash-flow is growing more negative both because the plan is maturing and we are having more and more retirees higher percentage of the plan is retired, and because we are better funded, the contributions are going down so we have both benefit payments increasing and contributions going down. so, this is

essentially the information that ana showed earlier in the liquidity analysis of what we are projecting go forward with the net cash-flow. so, then turning to the capital market assumptions, we looked at nepc assumptions on a 5 to 10 year basis, earlier it was 5, i think they switched to 10 year basis and 30 year basis, and so historically the bottom of the bars represents the 5 or 10 year basis and the top has represented the 30 year basis. we generally wanted the discount rate or expected return to fall in the middle of those bars. we included here two different asset allocations as of

december 1, 2021. compared to their december 2021 capital market assumptions. the first one is your current allocation where the range goes from 6.6 to 7.9, and then based on the liquidity analysis we just created illustrative asset allocation that assumes you take 5 percent out of private equity, which is your highest earning asset class and allocate it to treasuries in liquid credit, and you can see that that reduces those returns by about 40 basis points. we look both as ann indicated both at nepc assumptions but also apply your asset allocation to the assumptions of other investment consultants over the differed periods. we look at the average

expected return, both with and without nepc and that really serves as guideline for us for what the reasonable assumption is, and so for the allocation average with nepc included is 6.4 to 7.4, and again if you went with the illustrative asset allocation that reduced the private equity allocation, it drops it 30 to 40 basis points. now, every year we talk about the reasonable range and whether or assumption is in the reasonable range. it would be much easier for our decisions if there was a bright line to define the reasonable line, but there isn't a bright line and so we are just trying to convey

where the boarders are, but the current assumption of 7.2 is the high end of the range. it is still clearly within the reasonable range as far as we are concerned for the current allocation. but, in the illustrative allocation, 7.2 would be a very high assumption. it would be kind of borderline whether that is in the reasonable range or not. so, there are a couple potential rationals for reducing the discount rate. one is just to move closer to the center of the reasonable range but the current allocation-that will have the impact of improving your liquidity situation because it will increase contributions from what they are currently projected to be. and, the other is

if you are anticipating making the asset allocation changes, then you may want to take a step now so that your assumption stays within the reasonable range for a more conservative asset allocation. so, the current discount rate is higher then the national median. high end of the reasonable range. potential liquidity issues, so reductions would ease the issues to the reasonable range. we wanted to give projections so you see what happens if you did reduce the discount rate. these are still preliminary projections and so there is still some movement that will happen on them, but reducing the 7 percent we would expect to still be over a

hundred percent on a market basis. that is important for the eligibility for supplemental colas for the 96 retirees. contributions would be higher and would clearly mean the members contribution only went down by 50 basis points in the coming year. the projected contributions in total would also be higher. at 6.8 percent, that would drop us slightly below that hundred percent. it would increase the contributions so that we are close to the level of the current contributions for 2024, but we would see decline after that. so, just to summarize our recommendations, we are not suggesting

any changes to price inflation wage inflation or the payment growth rate, which we set equal to wage inflation. the discount rate we are suggesting that the board consider options depending on your view on whether you want to be in the middle of the reasonable range and to what extent you want to anticipate liquidity (inaudible) this is just a discussion item today so we are just starting. we would like to get feedback from the board on the direction and additional information you like to see eventually to make a decision. with that, we will take any questions. >> thanks bill. thank you ann. commissioners, any comments and questions?

commissioner heldfond. >> obviously this has-this decision (inaudible) upon all the interested parties at the table from the numbers to the city [difficult to hear speaker] given the current-everything we have seen today, obviously the importance is more highlighted. my only point in saying all this and not belaboring it, i think is really important that we make this pretty transparent decision making and get input of all the interested parties that are involved and especially obviously the city. my only comment. >> great. commissioner, any

other comments? commissioner driscoll. j >> i want to make sure i understand bill your definition of what reasonable range is. the word reasonable is always a red flag to me when i hear it particularly when lawyers use it. i didn't get how you got to the reasonable part after looking at the set of numbers. >> well, like i said, there is no bright line. there is a requirement for us as actuaries that discount rate has to be within what we consider the reasonable range. i do look at the expected ranges of expected returns over 10 and 20 year

periods. definitely not wanting it to be higher then the long range period. so i think that's probably the issue that comes up here is that 7 percent is the return for 20 to 30 year period if we used the illustrative (inaudible) it would make me nervous to have our assumption be above the 7 percent. here we are at 7.4 so at the high end cht it would make me nervous if we were above 7.4. >> okay. i understand how you explain that then. part 2, i do recall long-term numbers so the current issue with inflation 8.5, whatever it was you told us today, i do have a memory like what it was in the 70 however do not know

how it effected rates of return. i think either you-you came up with assumption of 5 percent rate of return. to me that is high. first of all, explain to me, how you got to 5 percent realized-the history, meaning if you recall what the high inflation in the 70, how it effected the market returns that we are trying to assume to figure what is the reasonable range for the next 10 to 30 years. >> so, back in the 70 and 80 pension plans still had very similar expected rates of return in the 8 to 9 percent range, so the asset allocations were predominantly fixed income securitys so

the expectation was built around the yields on the fixed income securitys. as we moved out of that range, the asset allocations have changed so that is where you start getting the larger real rates of return, but we are really developing that basis on the asset allocation and capital market assumptions, but we are just reflecting to you where those are coming out-this isn't the real rate of return i'm showing on-you are not seeing this slide. i'm not sharing anymore. if you looked at slide 18, we show the 10 year treasury yield compared to the expected rate of return and that difference is kind of the-the difference between our expected inflation assumption and the expected return is the real rate of return and we

have been under 5 percent for that, but not a lot. it has been between 4 and a half and 5 most years. that really reflects what you have done with the asset allocations such as anything else. >> thanks bill. >> commissioner heldfond. anybody else? i just want to add to your comment commissioner heldfond. ia gree i think it is important to get feedback and input from all the different stakeholders. this is a big decision and impact a lot of different people, so we will continue those conversations, but thank you bill and today for this presentation. so,

madam secretary, seeing no in-person public comment for this item recollect , we will go to online callers. >> thank you. reminder to any callers to press star 3 to be added to the queue. moderator, do we have callers on the line ? >> madam secretary, there are no callers on the line. >> thank you. there are no calls, public comment is closed. >> great, public comment is closed. sorry, please call the next item. >> item 19,ing discussion item. travel expense report for quarter ended june 30, 2022. >> that would be you? >> yes, thank you. this is our standard report with travel expenditures and for the quarter at $46 thousand including expenditures of $56

thousand. the only thing i want to add is i anticipate we will going forward spend more on travel as things open from covid and the team has done a phenomenal job maintaining contacts with managers but there is opportunity to do more on the ground diligence going forward. >> great. >> any public comment on travel expense report? seeing no in-person public comment regarding the travel expense report, madam secretary, please open the phone line for callers please. >> thank you. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you, hearing no calls, public comment is closed. >> great. please call the next item.

>> item 20. discussion item. july 2022 quarterly sfers retirement services dashboard. >>-good afternoon commissioners. you may recall that at the may board meeting we presented you with the first dashboard that highlighted the statistics for the member services divisionism we told you would bring this to you quarterly and over time build that out so you can compare quarters and year over year. one of the highlights i did want to talk to you about something we are pretty proud of given the transition to online services during covid is our sfers connect. that is our website where members can direct their questions to us. we have been averaging all most a thousand e-mails per month and so we are proud to say that we are responding

to our customers. perhaps 6 a hour and i thought that was something i wanted to highlight given that we have not been open to the public. i also wanted to briefly talk about our disability cases that some of the board members had expressed interest in. as you may recall, we have hired some additional staff in the city attorney's office to assist in the back-log and i'm happy to say since they started in the last 3 months they have reduced the back-log of cases that needed to review by all most half and that between october and december we have a full disability hearing case load, so i'm really happy to report that these cases are moving along. happy to take any questions. >> any questions? >> give numbers in terms of back-log is? >> hold on, everyone

is talking at once. commissioner driscoll. >> can you tell us what the back-log number was versus what it is now? >> depends upon what point in time i can get the information and i will forward that to you. i can get that to you from when they started the end of march through the end of the quarter. >> okay. those two dates will be fine. if you have them another reference point july 1, 2021. >> i'm sure-we don't have it, but we can collect it and get it to you. >> thank you. >> july 1, 1970-just kidding. commissioner heldfond. >> i just thought (inaudible) [talking in the background] >> thank you. >> thank you. anything else? great.

take public comment on that. in-person public comment. seeing none, is closed. madam secretary, please open the phone lines for callers. >> thank you. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. public comment is closed. we will go please call the next item. >> item 21, discussion item chief exectsk officer report. >> thaurng. we are in the home stretch. i have 4 points. first, with respect to the potential ballot measures, the retiree supplement cola measure would be presented to voters in november. the (inaudible) pension benefits will not proceed to the ballot in november. second,

i want to update you on our current in office work policy. as of last week, all sfers staff are required to be in the office a minimum of 3 days per week and i want to share with the board the same thing i shared with all of our staff here which is why. number one, it is consistent with the mou and guidance of the city. number two, i spent a lot of time talking to peers, public plans, asset managers folks in the industry to understand their approach and i would say it is highly unusual for any of them to be fully remote. most are doing a few days in the office, a few days at home in the 2 to 3 range and there are some fully back, so i think this approach is very much consistent with what our peers are doing and are something to consider when we think about retaining talent as well. third and what i think is most

important is that, we have a real opportunity given our aum, given our staff to continue to move this organization forward. i think we can accomplish a lot at home as individuals but also think we can accomplish a lot when we come together, share institutional knowledge, collaborate, brainstorm and a lot of the activities are effective in the office so really excited to have our team in here again at least 3 days a week and i asked that to be composed of 1 day a week individual teams are all together and 1 day where the whole organization is here so we can have interaction across the board. you may ask the question what does that mean for our members, and we are going to continue to be open 2 days a week by appointment only for limited service. as you heard from karen we have been serving our members through online appointments and are through sfers connect

and in fact i think a number of our members appreciate the ability to do that, so we will continue to look for ways to enhance those online services, but we will continue with the 2 day in office by appointment for services. next in your materials we included the forward calendar. now that you all have voted on the committee assignments i just wanted to offer up i'm available as we think about what we want to get on the calendar for those committee meetings and frequency we want to meet. make sure they are consistent what is in the governance policies so happy to work with each of you. now the calendar does not reflect all the committee meetings but it is something we can work on making happen. finally, really wanted to remind all you what diane mentioned in the presentation that we continue to be a black out period with respect to dc search for a target date fund

provider. everything i had unless you have questions. >> any questions commissioners? commissioner driscoll. >> one question. an item you touched on under the cio report where the bullet point was implement and enhance decision framework. which is great. i am wondering not how much and not the why, the improvements are you bringing in other decision consultants to help you improve the process or is it just self--driven because we have so much talent in-house? >> thank you for the question. for now, i would say it is self--driven. i see today there is opportunities to enhance the process. again, i think there is a lot of good things in the organization. we can enhance it and bring experience from prior

institutions and knowing what peers do to move forward cht i think that should be the first step. it is down the road. we want to (inaudible) maybe bring in a consultant but think we have a lot of opportunity and ideas about what we can execute today. >> that sound great. not speaking for the board, but i think that it is a opportunity to prove the board i think is more then willing to invest in staff even more to whatever resources you need and sometimes it is that person coming in into actually help lead and guide as you-all the work you have to do and build the collaboration et cetera. it is more then a wish list. there is a lot of people that can do it, you know how to find it. thank you. >> appreciate it. thank you. >> (inaudible) >> take the opportunity to talk about what you and i chatted about before about the investment committee. as we start another investment committee

using as it as it is scaling towards a educational forum and we have proven it and the fact we had commissioners that embrace the presentation of things like (inaudible) will probably send out a note to request your ideas, but i want to also underscore the fact we didn't have to cancel an investment committee while a senior presenter was in the airplane coming here and hopefully we can continue that going forward. also, last point, i think as

a employer, i think we have all seen that we learned a lot about what our employees do and their job functions and what was important in terms of the (inaudible) and one thing here i learned as a commissioner about our staff is the importance of their hours. they are on a global basis and a lot of times the rules of the city for get back to work don't jive with somebody's (inaudible) 11 o'clock at night. hopefully that recognition of our staff goes forward. >> anybody else? any ort comments? anything to wrap up? cio . have we taken public comment yet? >> not yet. >> okay, great.

seeing no in-person public comment, in-person public comment is closed. madam secretary, can you please open the phone lines for callers? >> thank you. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing no calls, public comment is now closed. >> great. public comment is closed. please call the next item. >> item 22. discussion item. retirement board member good of the order. >> anything anyone wants to say for the good of the order? yours was a little good of the order. i would just add that, i said this to folks publicly, we are moving stronger and stronger back at the board of supervisors to more things in-person. i understand the mou negotiated 3 days a

week with flexibility in the schedules. i think it would be helpful to have staff and others on-we only meet one time a month for this board meeting to have both all our consultants and staff here when they are presenting. i think it makes for a easier flow of the meeting and communication and then i honesty think we need to have a discussion about continuing online. we are having that discussion at the board of supervisors as i said. someone made a motion that will be considered in the next week or so only in the case of extreme situations, but i think we are moving back more in that direction. will make for easier flow of the meeting. fully in person, yes. so, interested to hear what people's thoughts are about that. no pressure. right. commissioner bridges says we are already

here. commissioner heldfond. >> yeah, in my mind this (inaudible) what is happen in the pandemic in the covid and how that goes, and i think sit and plan and slowly move and we'll know more in the winter time whether this is still a predominant issue we have to deal with. baby steps (inaudible) >> i'm only speaking about this meeting. this once a month meeting. >> yeah. >> okay. commissioner aj thomas. >> i would agree with commissioner heldfond that i think allowing

(inaudible) given what we are hearing from public health officials it made sense to take a step back towards in-person meetings and in-person gatherings but agree building flexibility to pivot back say in the winter new data comes out and might be adviseable to revert to hybrid. building in the flexibility is good but the short term it makes sense to get us back in. >> right. just a point of clarification. a lot is deckitated by the health officer and the guidance we receive so if there were increase surge or if there were a step back they would advise us of that but that's not all the indications are pointing a different direction. i will just say this, one reason why for me the flexibility as a parnt is really important in terms of hours, because there is a lot of activities children require before and after school so that

is a important consideration for all the staff. the distance people have to travel. this meeting is one day a month and all surrounding businesses that rely on and feed off of people coming into the office, so we want to lead by example here, so i definitely agree having 3 day a week where we are right now is what is be promoted and i think people are beginning to come back now to that. that is the requirement. but for this meeting i think it would be important to have folks in person as much as possible and i leave that up to you, but just wanted to put it out there. anything else anyone wants to add? great. let's take in-person public comment. seeing none. in-person public comment is closed. open up the phone lines madam secretary for callers if there are any. >> thank you. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you. hearing

no calls, public comment is now closed. >> great. i'll say one other thing just for the consideration of the good. we also adjusted-there was concern with conflicting schedules with other commissions. it is one reason why we moved to the third thursday and wanted to be respectful so we heard people's request loud and clear so thanks to everyone that adjusted the schedule moving to the third thursday of the month because previously it was conflicting with another commission at the same time, so--but when we were meeting it was conflicting. and also the second thursday did. that was also conflicting. i couldn't do it wednesday. i sit on budget committee. thank you to everyone. just wanted to put that out there and let folks know that wrote in with concerns we heard you loud and

clear. alright. people that like to come in person we hope they will come back. thank you. public comment is closed. callers online are closed. madam secretary, please call the next item. >> item 23, adjournment. >> we are adjourned. [meeting adjourned]

>> i am rafael mandelman, i chair this board. vice chair is aaron sk