741 Colonel Ledyard Highway

Ledyard, Connecticut 06339

TOWN OF LEDYARD

Retirement Board

Meeting Minutes

Chairman

John Rodolico

Regular Meeting

Tuesday, February 20, 2024

10:00 AM

Council Chambers - Hybrid Format

CALL TO ORDER

Chairman Rodolico called the meeting to order at 10:00 a.m. He introduced the newest member

to the Retirement Board; Minna DeGaetano.

Ms. DeGaetano was appointed as a voting member.

II.

ROLL CALL

Board Member Sharon Wadecki

Chairman John Rodolico

Present

Board Member Daniel Panosky

Alternate Member Minna DeGaetano

Board Member William Thorne

Board Member Roger Codding

Excused

Also in attendance:

Naomi Rodriguez, Town Councilor

Staff Present:

Mayor Fred Allyn III

Matt Bonin, Finance Director

Christina Hostetler, Town Hall Assistant

Staff Excused:

Marisa Iannella Rodriguez, Human Resource Director

Ian Stammel, Assistant Finance Director

III.

PRESENTATIONS

Chris Rowlings Fiducient Advisors - Fourth Quarter Investment Review

Chris Rowlins, Fiducient Advisors presented the Fourth Quarter Investment Review for the Town

Retirement Plan.

Mr. Rowlins started the meeting by stating that the fourth quarter was very solid with the

portfolio returning about 9%. Inflation has come down rather meaningfully to 3.5% from 18

months ago when the rate was at 9%. The current inflation rate is not too off from the 2% target.

With the restoration of higher yields, the new environment is much more favorable to forward

looking thinking around portfolio outcome. The balance that fixed income provides in a

portfolio setting has been restored.

Fixed income - It was a very strong quarter for fixed income as interest rates continued to lower.

The Bloomberg U.S. Aggregate was up 6.8% and there was a double-digit gain for long

duration.

Global Market - U.S. small cap was a standout in the fourth quarter. Technologies were up and

energy and utilities were down. Big Tech companies associated with AI were up 100% in 2023.

NASDAQ, which is technology heavy, was up 44% in the fourth quarter. A milder winter in

Europe benefited the impact of energy costs despite the war in Ukraine. Emerging markets were

up 8% for the quarter and almost 10% on the YTD basis. China has been holding back emerging

markets due to struggles with high debt and sluggish spending out of Covid-19. Other areas of

emerging markets such as India, Mexico and Latin America fared well. Mexico is now the

second largest trading partner of the U.S.

Real Assets - REITs were one of the top performers in the quarter. Commodities were weak and

one of the few classes in the negative category. There was a modest return for hedge funds.

Portfolio performance and considerations: The Town is still using a 60/40 portfolio, 60

dedicated to equities and 40 to fixed income. A conservative 6.25% discount rate still applies

compared to the average retirement plan in Connecticut which hovers around 6.75%. Mr.

Rowlins added that the Town of Ledyard is well above its peers financially and in a funded

status perspective.

Within the fixed income segment there are a couple of strategies in place. The Vanguard total

bond market index which gets access to the bond market and duration profiles. Met West and

Prudential are Core Plus managers which have the ability to invest in non-investment grade up to

certain restrictions. Investments that Core Plus managers can utilize include high yield,

commercial mortgage and ABS investors.

Metropolitan West was put on watch status during the third quarter due to some notable

announced retirements within the portfolio management team which was somewhat disruptive.

FA's concern is around outflows and uncertainty around the organization on a go forward basis.

Although Met West had a strong fourth quarter FA recommends eliminating allocation to

MetWest and to be more conservative along the lines of the quality of the portfolio with Baryd

and Harbor which would also compliment the PGIM core return focus already in place. The

overall goal is to be a bit more conservative within the fixed income sleeve. FA does not have

any proposed changes to the Domestic equity or International market sleeves at this time.

Investment Results - A 9% return net for the quarter, when monetized the number is

approximately 2.4 million and the ending market value is $29.1 million. On a one-year basis the

portfolio was up 13.6% net. The short-term equity bucket is designed for benefit payments

which is hovering around 5% for money market instruments, which is attractive. Black Rock had

both a solid quarter and year. Since the BlackRock strategy was put into the portfolio in 2022 it

has delivered a 2.5% positive vs. the AGG which was down 1.4%. In Domestic Equity

Touchtone has delivered very solid results.

Investment Gain/Loss summary - Approximately $500,000 has been taken out for benefit

payments. There was also 2.4 million in gains.

Mr. Rowlins shared a trade cash flow worksheet which outlined a move of approximately $3.6

million out of Metropolitan West Total Return Bond Fund Plan and equally into Baird

Aggregate Bond Fund and Harbor Core Bond Fund Retirement. He added that FA is making

similar recommended approaches to other clients as well, not just Ledyard.

Mr. Rowlins presented a recommendation for increasing the portfolio's allocation to fixed

income by 5% over a six-month period. The modeling prepared but FA shows that by increasing

fixed income by 5% the return profile will come by a basis point or two but the risk profile will

come down pretty meaningfully which allows more predictability and less volatility.

Actuarial Review - Funded ratios have increased to 88.7%. Mr. Rowlins said most Towns are

averaging 72-72% with a higher discount rate. He added that these are good numbers for

Ledyard.

Chairman Rodolico clarified that Mr. Rowlins was suggesting moving all Metropolitan West to

Baird and Harbor equality and proposed a vote to the Board.

Motion to APPROVE liquidation of Metropolitan West fixed income and reallocation of funds

equally to Baird and Harbor per Fiducient Advisors recommendation.

RESULT:

MOVER:

APPROVED AND SO DECLARED

John Rodolico

SECONDER: Sharon Wadecki

AYE:

Wadecki Rodolico Panosky DeGaetano

Thorne Codding

EXCUSED:

Mr. Rowlins reiterated the recommendation to increase fixed allocation by 5% and reduce global

equities by 5% over a 6-8 month period, keeping within the target ranges. Charman Rodolico

suggested voting for a year period, Ms. Wadecki agreed.

Mr. Rowlins ended the meeting by saying there were two takeaways on Fuducient Advisor's end.

He will follow up with Metropolitan West and the 5% strategy, these changes will be reflected in

FA's monthly flash reports.

Motion to APPROVE increase of fixed income allocation by 5% over the next year.

APPROVED AND SO DECLARED

John Rodolico

RESULT:

MOVER:

Sharon Wadecki

SECONDER:

Wadecki Rodolico Panosky DeGaetano

Thorne Codding

AYE

EXCUSED

IV.

REVIEW AND APPROVAL OF MINUTES

Motion to APPROVE Special Meeting Minutes from January 23, 2024, as written.

Motion failed due to two abstained votes and two absences. The minutes vote will take place

during the Board's next meeting in March.

MOTION FAILED

John Rodolico

RESULT:

MOVER:

Daniel Panosky

SECONDER:

DIRECTOR OF HUMAN RESOURCES UPDATE

Director of Human Resources update.

No report.

VI.

FINANCE DIRECTOR'S REPORT

Finance Director’s Report.

No report.

VII. OLD BUSINESS

Motion to APPROVE a monthly retirement benefit for Sharon Dutra in the amount of $690.12 in

the form of a modified cash refund annuity effective February 1, 2024.

TABLED from January 23, 2024, special meeting.

Chairman Rodolico said this motion was tabled from last month meeting due to calculation

questions. He confirmed that the calculations were based on the plan that was affective upon

termination.

APPROVED AND SO DECLARED

John Rodolico

RESULT:

MOVER:

Sharon Wadecki

SECONDER:

Wadecki Rodolico Panosky DeGaetano

Thorne Codding

AYE

EXCUSED

Discussion on a review of applicable labor contracts and retirement documents for Town of

Ledyard employee groups with applicability to retirement eligibility and benefits continued.

Review of Retirement Plan amendments, see attachments.

Chairman Rodolico said this is a work in progress and moved this discussion to the Board's

March meeting due to Mr. Thorne's absence.

NO ACTION

RESULT:

Any Other Old Business to come before the Board.

None.

VIII. NEW BUSINESS

Motion to APPROVE a monthly retirement benefit for Jean Dutton in the amount of $1568.97 in

the form of a modified cash refund annuity effective April 1, 2024.

Chairman Rodolico asked if Ms. Dutton worked in the nursing department. Mayor Fred Allyn III

confirmed that she was. He added that she has been employed with the Town of Ledyard for

approximately 27 years.

APPROVED AND SO DECLARED

John Rodolico

RESULT:

MOVER:

Sharon Wadecki

SECONDER:

Wadecki Rodolico Panosky DeGaetano

Thorne Codding

AYE

EXCUSED

Any other New Business to come before the Board.

Ms. DeGaetano asked if the Board always pays the contributions in one lump sum, is it a

requirement? Mr. Bonin said that Town has always paid it in one lump sum. Ms. Wadecki

confirmed that payment is made once a year to keep the money in the Town as long as possible.

Ms. DeGaetano said generally it's safer to contribute the funds monthly instead of putting

everything in at a single point of time when the market could be up or down at that moment. Mr.

Panosky suggested asking Mr. Rowlins his opinion. Mr. Bonin pointed out that by the Town

holding onto the funds it is earning 5%, which helps the Town. On a year where interest rates are

lower it would make sense to move the funds sooner but for now the 5% interest is beneficial for the

Town.

DISCUSSED

RESULT:

IX.

ADJOURNMENT

Motion to ADJOURN the Regular Meeting at 10:58 a.m.

APPROVED AND SO DECLARED

Sharon Wadecki

RESULT:

MOVER:

John Rodolico

SECONDER:

Wadecki Rodolico Panosky DeGaetano

Thorne Codding

AYE

EXCUSED

DISCLAIMER: Although we try to be timely and accurate these are not official records of the

Town.