Loading...
HomeMy WebLinkAbout4.a. Review draft Position Paper to approve proposed revisions to Board Policy No. BP 005 - Statement of Investment Policy Page 1 of 28 Item 4.a. CENTRAL SAN BOARD OF DIRECTORS . , , . POSITION PAPER . , DRAFT MEETING DATE: SEPTEMBER 20, 2021 SUBJECT: REVIEW DRAFT POSITION PAPER TO APPROVE PROPOSED REVISIONS TO: 1. BOARD POLICY NO. BP 005 - STATEMENT OFINVESTMENT POLICY, AND 2. INVESTMENT GUIDELINES DOCUMENTS (IGD) RELATED TO THE PUBLICAGENCIES POST-RETIREMENT HEALTHCARE PLAN TRUST, WHICH INCLUDES BOTH OF THE FOLLOWING: • IGD FOR THE EXISTING GOVERNMENT ACCOUNTING STANDARDS BOARD 45 OTHER POST-EMPLOYMENT BENEFITS TRUST (GASB 45 OPEB TRUST), AND • IGD FOR THE PENSION PREFUNDING TRUST SUBMITTED BY: INITIATING DEPARTMENT: KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION-FINANCE REVIEWED BY: PHILIPLEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ISSUE Central San's investment policies for its assets are reviewed and approved annually by the Board of Directors (Board) in accordance with the District investment policy. BACKGROUND Board Policy 005 (BP 005) - Statement of Investment Policy Review. California Government Code section 53646 states the Treasurer or Chief Fiscal Officer of the local agency may annually render to the legislative body of that local agency and any oversight committee of that local agency a statement of investment policy, which the legislative body of the local agency shall consider at a public meeting. Although no longer required by statute, it has been Central San's practice and policy to render an annual Statement of I nvestment Policy to the Board for review and approval (Attachment 1). As part of this annual investment policy review, staff review the policy and relevant external guidance, including publications issued by the California Debt and I nvestment Advisory Commission (C D I AC)to ensure Central San is in September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 4 of 46 Page 2 of 28 compliance. Quarterly investment reports are also provided as part of the financial package distributed to the Board. These provisions have also been specified in Central San's investment policy. Staff has reviewed B P 005, the 2021 Local Agency Investment Guidelines issued by the C D I AC, as well as Califomia Govemment Code section 53601 to ascertain whether additional revisions may be appropriate. As part of this review, it was noted Senate Bill (SB) 998 was approved by the Governor on September 28, 2020, resulting in some changes to a few California Government Code sections governing local government investment rules. While many of the changes resulting from SIB 998 are not impactful to Central San, the one noteworthy change was a slight increase the proportion of a local agency's investment portfolio that may be invested in a single issuer of commercial paper and medium term notes. Another consideration in this year's investment policy review stemmed from a prior year discussion on the possible merits of opening an account and investing with California Asset Management Program (CAMP) as a supplemental investment option to the state's Local Agency Investment Fund (LAI F). It was discussed previously that CAMP is a popular investment tool for other California public agencies that offers many benefits similar to the LAI F. Similar to LAI F, CAMP offers reasonable investment yields relative to its strong security and same-day liquidity when compared to other permissible investment alternatives beyond LAI F. Unlike LAI F, however, CAMP is rated AAAm with Standard and Poor(S&P), allocates investment earnings monthly compared to quarterly, and provides efficient security-enabled online access for investment transactions. Yields sometimes are higher or lower than LAI F given the differing maturity/duration strategies of the two investment portfolios. As CAMP has been a permissible investment under Central San's existing Investment Policy and as Central San periodically finds itself at the $75 million investment cap imposed by LAI F, staff believes CAMP would provide an advantageous investment alternative to supplement LAI F. During Fiscal Year(FY) 2019-20, Contra Costa County amended its investment policy to permit CAMP investments. While it was initially not available to voluntary pool participants (such as Central San), staff was recently informed that voluntary pool participants are now able to invest with CAMP. Given the low interest rate environment and the fact that CAMP's yields are currently below LAI F, staff does not consider it an urgent priority to open an account with CAMP at this time. However as the possibility of opening a CAMP account was discussed in the prior year's review of BP 005, an update on this topic was justified. Staff will continue to monitor interest rates and return to the Board at a later date should it later be recommended that Central San pursue opening an account with CAMP. A copy of BP 005 with track changes has been included as an attachment to this position paper (Attachment 1). The following is a summary of changes being proposed to BP 005: • Eliminate references to "GASB 45" in title of OPEB trust, as this is an old accounting pronouncement that was superseded by the subsequent issuance of GAS 75. • Re-title the "Collateralized Certificates of Deposit" section to more clearly distinguish it from "Non- negotiable Certificates of Deposit", which are also permitted under the Investment Policy. • Establish a 20% cap on the proportion of portfolio that may be invested in Collateralized Non- Negotiable Certificates of Deposit. Adding a proportional cap reduces investment risk, is consistent with other investment policies of California municipalities, and is consistent with the fact that a proportional investment limit is also placed on the amount of monies that may be invested in Negotiable Certificates of Deposit. • Waive the requirement for Negotiable Certificates of Deposit to be rated AA or higher if they are FD I C insured ($250,000 limit), consistent with other California municipal investment policies. • Increase the proportion of the portfolio that may be invested in Commercial Paper as well as Medium Term Notes with a single issuer from 5% to 10% to reflect changes to Califomia Govemment Code section 53601 effectuated by SIB 998. • Add "California Asset Management Program" and "CalTrust" in description of "Government Pools" September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 5 of 46 Page 3 of 28 section to clarify that these are common pools used by other California government agencies. • Disclose the current investment cap ($75 million) in the LAI F section to improve transparency of the document. OPEB Trust IGD Review.- The OPEB Trust was established by Central San in 2009, to hold assets for the payment of other post employment benefits to retirees. Public Agency Retirement Services (PARS) is the Trust Administrator responsible for recording/sub-trust administration, plan compliance relative to GASB standards and prevailing laws as well as monitoring contributions and processing disbursements. US Bank is the Trustee and custodian of assets while and HighMark Capital Management is the sub-adviser hired by US Bank to invest plan assets according to the "moderate" investment strategy chosen by the Board in 2008. The market value of the account at August 23, 2021, was $85.5 million. Staff provides quarterly reports of the OPEB Trust investments to the Finance Committee, and HighMark and/or PARS presents an update of the OPEB Trust twice a year to the Finance Committee. In consultation with Central San's HighMark Investment Advisor, staff proposes the following edits to the OPEB Trust IGD as summarized in Attachment 2: • Eliminate references to "GASB 45" consistent with changes proposed to BP 005 outlined previously. • Update the target rate of return to reflect the discount rate used in the latest OPEB actuarial funding report issued by Bartel (5.75%). • Update the market value of the Trust as of the date of the investment advisor's review(August 23, 2021). • Revise "Anticipated Cash Flows" section to eliminate references to contributions that are no longer budgeted prospectively in FY 2021-22. • Making clarifications and minor revisions in the "Quality", "Duration" and "Diversification" sections to reflect current market and bond index standards used by HighMark's fixed income team. Pension Prefunding Trust IGD Review.• I n FY 2016-17, the Board directed staff to establish a new I nternal Revenue Code Section 115 Pension Trust(Pension Trust) as an alternative funding source for Central San's pension obligations. At the July 20, 2017 Board meeting, the Board adopted a resolution authorizing the establishment and funding of a new trust entitled "Public Agencies Post-Employment Benefits Trust" to be initially funded with $3.359 million from the prior year's budget variance. The market value of the account at August 23, 2020, was $10.7 million, reflective of trust contributions to date (including $1.25 million during FY 2019-20) and investment growth. Similar to the OPEB Trust discussed previously, PARS is also the Trust Administrator for the pension trust account responsible for record keeping/sub-trust administration, plan compliance relative to GASB standards and prevailing laws, as well as monitoring contributions and processing disbursements. US Bank is the Trustee and custodian of assets while HighMark Capital Management is the sub-adviser, hired by US Bank to invest plan assets according to a "moderately conservative" investment strategy. The Pension Trust was set up similarly to the OPEB Trust I GD in a single vehicle with the OPEB Trust, as part of the Public Agencies Post-Retirement Health Care Plan Trust. This resulted in economies of scale as to the level of fees charged by both HighMark Capital Management and PARS. Staff provides quarterly reports of the Pension Prefunding Trust investments to the Finance Committee, and HighMark and/or PARS presents an update of the Pension Trust twice a year to the Finance Committee. Pursuant to Board direction, following the payoff of Central San's pension unfunded actuarially accrued liability(UAAL)totaling $70.8 million in June 2021, much of the Pension Prefunding September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 6 of 46 Page 4 of 28 Trust ($12.8 million)was liquidated to effectuate this transaction. The Pension Trust remains active at this time, should the Board direct additional contributions to the trust at a later date (such as potentially directing the annual savings from the UAAL transaction to this Trust). At this time staff does not propose any substantive changes to the Pension Prefunding Trust IGD (Attachment 3). In consultation with Central San's HighMark Investment Advisor, staff proposes the following minor edits to the OPEB Trust IGD as summarized in Attachment 3: • Update the market value of the Trust as of the date of the investment advisor's review(August 23, 2021). • Disclosing the transfer made in June 2021 (in relation to the payoff of the pension UAAL with CCCERA). • Slightly reduce the target rate of return to reflect the latest long-term capital market return assumptions employed by HighMark for the "moderately conservative" investment strategy. • Making clarifications and minor revisions in the "Quality", "Duration" and "Diversification" sections to reflect current market and bond index standards used by HighMark's fixed income team. ALTERNATIVES/CONSIDERATIONS Additional options could be added for Central San investments that fall within the permissible investments prescribed by California Government Code. The Board could also choose not to make the proposed changes or make other changes to the Investment Policy, and the OPEB and Pension Prefunding Trust IGD. The current "moderate" and "moderately conservative" investment strategies for the OPEB and Pension Prefunding Trusts respectively previously adopted by the Board could be changed to less or more aggressive strategies. No such changes are currently recommended by staff. FINANCIAL IMPACTS The yield earned on Central San investments and Trust investments may be impacted by the policies and guidelines being considered, which address the risk tolerance and investment practices of the District. These policies and guidelines impact the goals of optimizing the return, taking into account the priorities of safety, liquidity, and yield (in that order). That being said, the changes being proposed in this year's review of the investment policies will not cause any known immediate fiscal impacts to Central San. COMMITTEE RECOMMENDATION The Administration Committee reviewed this matter at its meeting on September 20, 2021, and recommended RECOMMENDED BOARD ACTION Approve proposed changes to each of the following: 1. Board Policy No. BP 005 - Statement of Investment Policy;and 2. Investment Guidelines Documents (IGD) related to the Public Agencies Post-Retirement Health Care Plan Trust, which includes both of the following: • IGD for the existing OPEB Trust, and • IGD for the Pension Prefunding Trust Strategic Plan Tie-In September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 7 of 46 Page 5 of 28 GOAL THREE:Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability,, Strategy 2—Ensure integrity and transparency in financial management ATTACHMENTS: 1. Proposed Revisions to BP 005 (strikethrough) 2. CCCSD OPEB Trust IGD August 2021 (strikethrough) 3. CCCSD Pension Trust IGD August 2021 (strikethrough) September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 8 of 46 Page 6 of 28 Attachment 1 Number: BP 005 Authority: Board of Directors Effective: September 1, 2011 Last Revised: 0 October 7, 2021 ----- oo Last Reviewed: °% September 20, 2021 Initiating Dept./Div.: Administration/Finance CENTRALSAN BOARD POLICY STATEMENT OF INVESTMENT POLICY PURPOSE The investment policy of the Central Contra Costa Sanitary District governs the District's investments held with the following: • Contra Costa County • r^�5 Other Post-Employment Benefits (OPEB) Trust* • Pension Prefunding Trust* • Debt Reserves — as indicated in the Bond Official Statement (if applicable) *Trusts are governed by a separate Investment Guidelines Document provided by Investment Manager on an annual basis. Investments will be in compliance with the provisions of, but not necessarily limited to California Government Code Section 53601 and other applicable statutes. This investment policy is embodied in the following fourteen sections: POLICY I. Statement of Objectives The primary objectives, in priority order, of the District's investment activities shall be: • Safety. Investments of the District shall be undertaken in the manner that seeks to ensure the preservation of capital in the overall portfolio. • Liquidity. The District's portfolio will remain sufficiently liquid to enable the District to meet all operating requirements which might be reasonably anticipated. September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 9 of 46 Page 7 of 28 Number: BP 005 STATEMENT OF INVESTMENT POLICY Page 2 of 8 • Return on Investment. The portfolio will be invested to attain a market average rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints, liquidity needs, and cash flow characteristics of the portfolio. II. Permissible Investments Within the constraints prescribed by the Government Code of the State of California for permissible investments, the District's investment portfolio will only be invested in the following instruments: • United States Treasury Obligations. United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest. • United States Government Agency Issues. Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government- sponsored enterprises. • Municipal Investments. Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. Eligible obligations shall be rated in category "AA" or its equivalent or better by a nationally recognized statistical rating organization Nationally Recognized Statistical Rating Organization (NRSRO). No more than 5% shall be invested in any single issuer. • Money Market Funds. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. See. 80a-1, et seq.). That invest in the securities and obligations as authorized by California Government Code 53601 subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and that comply with the investment restrictions of this article and Article 2 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 10 of 46 Page 8 of 28 Number: BP 005 STATEMENT OF INVESTMENT POLICY Page 3 of 8 (commencing with Section 53630). To be eligible for investment pursuant to this subdivision, these companies shall either: i. Attain the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs; ii. Retain an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). A maximum of 20% of the District's portfolio may be invested in money market funds. No more than 10% of the District's portfolio may be invested in any one fund. Bankers'Acceptances, otherwise known as bills of exchange or time drafts, drawn on and accepted by a commercial bank. Purchases of bankers' acceptances shall not exceed 180 days' maturity or 40% of the District's moneys that may be invested pursuant to this section. However, no more than 5% of the District's moneys may be invested in the bankers' acceptances of any one commercial bank pursuant to this section. • Collateralized Certificate Time Deposits (Non-Negotiable Certificates of Deposit) issued by a Federal or State chartered bank or a Federal or State chartered savings and loan association. Time certificates of deposit shall meet the requirements for deposit under Government Code Section 53635 et. seq., The Director of Finance and Administration, for deposits up to the current FDIC insurance limit, may waive collateral requirements if the institution insures its deposits with the Federal Deposit Insurance Corporation (FDIC). No more than 20% of the District's moneys shall be invested in a combination of federally insured and collateralized non-negotiable certificates of deposit. Fully insured time certificates of deposit placed through a deposit placement service shall meet the requirements under Code Section 53601.8. • Negotiable Certificates of Deposit issued by a nationally or state- chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit shall not exceed 30% of the District's moneys that may be invested pursuant to this section and not more than 5% may be invested in any single issuer. Eligible negotiable certificates of deposit in excess of the FDIC insured limit shall be rated in category "AX or its equivalent or better by a NRSRO. September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 11 of 46 Page 9 of 28 Number: BP 005 STATEMENT OF INVESTMENT POLICY Page 4 of 8 • Commercial Paper of prime quality of the highest ranking or of the highest letter and number rating as provided for by a NRSRO. The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (a) or paragraph (b): a) The entity meets the following criteria: (i) Is organized and operating in the United States as a general corporation. (ii) Has total assets in excess of five hundred million dollars ($500,000,000). (iii) Has debt other than commercial paper, if any, that is rated "A" or higher by a NRSRO. b) The entity meets the following criteria: (i) Is organized within the United States as a special purpose corporation, trust, or limited liability company. (ii) Has program wide credit enhancements including, but not limited to, over collateral ization, letters of credit, or surety bond. (iii) Has commercial paper that has a short term rating of"A-1" / "P-1" / "F1" or higher, or the equivalent, by a NRSRO. Eligible commercial paper shall have a maximum maturity of 270 days or less. The District may invest no more than 25% of its moneys in eligible commercial paper and no more than -10% of its total investment assets in the commercial paper of the eu tstanding nemmernial paper of any single issuer. • Medium Term Notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States, or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated "AA" (or equivalent "P-1" / "A-1" / "F1") or better by an NRSRO. Purchases of medium-term notes shall not include other instruments authorized by this section and shall not exceed 30% of the District's moneys that may be invested pursuant to this section. No mere than 50 of the Dic+rin+'o total investment nertfelie may he invested in the debt of any one nernerofien The District may invest no more than 10% of its total investment assets in the medium-term notes of any single issuer. • Government Pools (e.g., California Asset Management Program, CalTrust, etc.). Shares of beneficial interest issued by a joint powers authority organized pursuant to California Government Code Section 6509.7 that invests in securities and obligations authorized by California Government Code 53601 subdivisions (a) to (q), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 12 of 46 Page 10 of 28 Number: BP 005 STATEMENT OF INVESTMENT POLICY Page 5 of 8 section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria: i. The adviser is registered or exempt from registration with the Securities and Exchange Commission. ii. The adviser has not less than five years of experience investing in the securities and obligations authorized in California Government Code 53601 subdivisions (a) to (q), inclusive. iii. The adviser has assets under management in excess of five hundred million dollars ($500,000,000). Local Agency Investment Fund of the State of California. Investment in LAIF may not exceed the current LAIF limit ($75,000,000) and should be reviewed periodically. • Supranationals, defined as United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Supranationals shall be rated "AX (or "P-1" / "A-1" / "F1" short term rating) or its equivalent or better by a NRSRO. Purchases of supranationals may not exceed 30% of the District's investment portfolio and no more than 5% may be invested in any single issuer. III. Bank and Dealers The District has the option of investing funds internally, using the services of the Treasurer's Office of the County of Contra Costa or a registered investment advisor to transact the District's investments in compliance with the requirements described in this investment policy. If the District uses the services of the County, the County Treasurer's Office will execute the District's investments through such brokers, dealers and financial institutions as are approved by the County Treasurer, and through the State Treasurer's Office for investment in the Local Agency Investment Fund. If the District utilizes an external investment advisor, the advisor is authorized to transact with its own approved broker-deal list on behalf of the district. The advisor will perform all due diligence for the brokers and dealers on its approved list. IV. Maturities To the extent possible, the District shall attempt to match its investments with anticipated cash flow requirements. Unless stated otherwise in this Policy or approval made by the District's executive body, the maximum maturity of the District's eligible investments will not exceed five years. September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 13 of 46 Page 11 of 28 Number: BP 005 STATEMENT OF INVESTMENT POLICY Page 6 of 8 V. Diversification The District's investments shall be diversified by: • Limiting investments to avoid over concentration in securities from a specific issuer or sector. • Limiting investments in securities that have higher credit risks. • Investing in securities with varying maturities. • Continuously investing a portion of the portfolio in readily available funds such as local government investment pools or money market funds to ensure that appropriate liquidity is maintained in order to meet ongoing obligations. VI. Risk Credit and market risks will be minimized through adherence to the list of permissible investments, a limit on maximum maturities, and the limitation on the total investment in a single issuer. VI I. Delegation and Authority The Board of Directors is responsible for the investment of the District's funds. The Board hereby delegates responsibility for investment transactions for the investment program to the General Manager or designee, for a one- year period. The General Manager or designee may delegate the day-to-day execution of investments to a registered investment advisor, via written agreement approved by the Board. The Advisor in coordination with the General Manager or designee will manage on a daily basis the District's investment portfolio pursuant to the specific and stated investment objectives of the District. The Advisor shall follow the policy and such other written instructions provided by the General Manager or designee. Vill. Prudence Prudent judgment must be exercised by the General Manager or designee and all investment staff responsible for investment transactions undertaken in accordance with this investment policy. The standard of prudence to be applied by the investment officer shall be the "prudent person" rule: "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 14 of 46 Page 12 of 28 Number: BP 005 STATEMENT OF INVESTMENT POLICY Page 7 of 8 affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." The prudent person rule shall be applied in the context of managing the overall portfolio. IX. Ethics and Conflicts of Interest Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the District. X. Controls The General Manager or designee will establish subsidiary accounting records of each investment which will enable the determination of income earned monthly and through maturity, and the balancing of the principal amounts to a control account in the general ledger. Internal control procedures require the General Manager or designee to sign all transactions, which are then countersigned by the General Manager. Such internal controls are to be reviewed by the District's independent auditors annually. XI. Safekeeping and Custody All investment transactions will be executed on a delivery versus payment basis. Securities will be held in safekeeping by a third party custodian designated by the District. The custodian will be required to provide timely (written or on-line) confirmation of receipt and monthly position and transaction reports. XII. Reporting The General Manager or designee will annually render a statement of investment policy to the Board. The General Manager or designee will submit a quarterly investment portfolio report to the District's General Manager and Board Finance Committee showing the type of investment, issuer, date of maturity, par (or face), dollar amount invested, current market value of all securities, and the source of this same valuation, and a statement of compliance of the portfolio with the investment policy. September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 15 of 46 Page 13 of 28 Number: BP 005 STATEMENT OF INVESTMENT POLICY Page 8 of 8 Also, annually, the GASB 45 Other Post_Employment Benefits OPEB and Pension Prefunding Trust Investment Guidelines Documents (IGD) will be brought before the Board Administration Committee for review. Quarterly statements for both Trusts are reviewed by the Board Finance Committee. At least, twice a year the investment manager and/or the Trust Administrator meets with the Finance Committee. XIII. Performance Evaluation The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. XIV. Policy Considerations This policy shall be reviewed on an annual basis. Any changes must be approved by the Board after review by the Administration Committee, as well as the individual(s) charged with maintaining internal controls. [Original Retained by the Secretary of the District] September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 16 of 46 Page 14 of 28 Attachment 2 HIGHMARKO CAPITAL MANAGEMENT Investment Guidelines Document Central Contra Costa County Sanitary District G ^ SB 45 / Other Post-Employment Benefits Trust EE Last-Revised August 20210 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 17 of 46 Page 15 of 28 Investment Guidelines Document Scope and Purpose The purpose of this Investment Guidelines Document is to: • Facilitate the process of ongoing communication between the Plan Sponsor and its plan fiduciaries; • Confirm the Plan's investment goals and objectives and management policies applicable to the investment portfolio identified below and obtained from the Plan Sponsor; • Provide a framework to construct a well-diversified asset mix that can potentially be expected to meet the account's short- and long-term needs that is consistent with the account's investment objectives, liquidity considerations and risk tolerance; • Identify any unique considerations that may restrict or limit the investment discretion of its designated investment managers; • Help maintain a long-term perspective when market volatility is caused by short-term market movements. • Assist the Plan Sponsor in formulating an Investment Policy Statement("IPS")for the account. Key Plan Sponsor Account Information as of August 20212020 Plan Sponsor. Central Contra Costa County Sanitary District Governance: Board of Directors of the Central Contra Costa County Sanitary District Plan Name("Plan'): Central Contra Costa County Sanitary District GASB 45rOther Post-Employment Benefits Trust Trustee: US Bank Contact: Susan Hughes, 949-224-7209 Susan.Hughes(@Usbank.com Account Number("Account"):6746055900 Type of Account: GASB-45 Other Post-Employment Benefits Trust ERISA Status: Not subject to ERISA Market Value of Account: $85,489,17173�80 as of August 23, 20212F�o Investment Manager: US Bank, as discretionary trustee, has delegated investment management responsibilities to HighMark Capital Management, Inc. ("Investment Manager"), an SEC-registered investment adviser Contact: Andrew Brown, CFA, 415-705-7605 or 925-683-8366 Andrew.brown@highmarkcapital.com Central Contra Costa County Sanitary District—GASB^F Other Post-Employment Benefits Trust Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 2 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 18 of 46 Page 16 of 28 Investment Authority: Except as otherwise noted, the Trustee, US Bank, has delegated investment authority to HighMark Capital Management, an SEC-registered investment adviser. Investment Manager has full investment discretion over the managed assets in the account. Investment Manager is authorized to purchase, sell, exchange, invest, reinvest and manage the designated assets held in the account, all in accordance with account's investment objectives, without prior approval or subsequent approval of any other party(ies). Investment Objectives and Constraints The goal of the Plan's investment program is to generate adequate long-term returns that, when combined with contributions, will result in sufficient assets to pay the present and future obligations of the Plan. The following objectives are intended to assist in achieving this goal: • The Plan should earn, on a long-term average basis, a rate of return equal to or in excess of the target rate of return of 5.756-.25%. • The Plan should seek to earn a return in excess of its policy benchmark over the long- term. • The Plan's assets will be managed on a total return basis which takes into consideration both investment income and capital appreciation. While the Plan Sponsor recognizes the importance of preservation of capital, it also adheres to the principle that varying degrees of investment risk are generally rewarded with compensating returns. To achieve these objectives, the Plan Sponsor allocates its assets (asset allocation)with a strategic, long- term perspective of the capital markets. Investment Time Horizon: Long-term Anticipated Cash Flows: Appreximotol„ $130 000 in ORthl„GentribUltiGRS. His#GF'ealy, Thethe Plan has modest monthly not implemented any liquidity requirements for beneficiary distributions. QGGasi„nall„a^ additiGRal a o_timo Gentrih6ltiGR m olse be mono 0 determined by the Central Sans Board Target Rate of Return: 5.756-15% annual target Investment Objective: The primary objective is to maximize total Plan return, subject to the risk and quality constraints set forth herein. The investment objective the Plan Sponsor has selected is the Moderate Objective, which has a dual goal to seek moderate growth of income and principal. Risk Tolerance: Moderate The account's risk tolerance has been rated moderate, which demonstrates that the account can accept average, or moderate, price fluctuations to pursue its investment objectives. Central Contra Costa County Sanitary District—GASB^F Other Post-Employment Benefits Trust Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 3 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 19 of 46 Page 17 of 28 Strategic Asset Allocation: The asset allocation ranges for this objective are listed below: Strategic Asset Allocation Ranges Cash Fixed Income Equity 0-20% 40%-60% 40%-60% Policy: 5% Policy: 45% Policy: 50% Market conditions may cause the account's asset allocation to vary from the stated range from time to time. The Investment Manager will rebalance the portfolio no less than quarterly and/or when the actual weighting differs substantially from the strategic range, if appropriate and consistent with your objectives. Security Guidelines: Equities With the exception of limitations and constraints described above, Investment Manager may allocate assets of the equity portion of the account among various market capitalizations (large, mid, small) and investment styles (value, growth). Further, Investment Manager may allocate assets among domestic, international developed and emerging market equity securities. Total Equities 40%-60% Equity Style Range Domestic Large Cap Equity 15%-45% Domestic Mid Cap Equity 0%-10% Domestic Small Cap Equity 0%-15% International Equity (incl Emerging Markets) 0%-15% Real Estate Investment Trust(REIT) 0%-15% Fixed Income In the fixed income portion of the account, Investment Manager may allocate assets among various sectors and industries, as well as varying maturities and credit quality that are consistent with the overall goals and objectives of the portfolio. Total Fixed Income 40%-60% If individual fixed income securities are purchased for the Plan, the following guidelines will be adhered to in the management of the fixed income segment: Eligible Investments • Debt obligations of the U.S. Government, its agencies, and Government Sponsored Enterprises • Mortgage-Backed Securities (MBS) • Asset Backed Securities (ABS) • Collateralized Mortgage Obligations (CMO) • Commercial Mortgage-Backed Securities (CMBS) Central Contra Costa County Sanitary District—GASB^F Other Post-Employment Benefits Trust Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 4 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 20 of 46 Page 18 of 28 • Corporate debt securities issued by U.S. or foreign entities including, but not limited to, limited partnerships, equipment trust certificates and enhanced equipment trust certificates • Eligible instruments issued pursuant to SEC Rule 144(a)* • Municipal Bonds Quality The individual securities portfolio will maintain a minimum weighted average effective quality of A- at all times. At the time of purchase, i-4ndividual securities shall have a minimum effective quality rating BBB- by Standard & Poor's (S&P) For purposes of determining an effective rating, when three agencies rate a security (S&P, Moodys, Fitch)the middle rating will be used. When only two of the three agencies rate a security the lower of the two ratings will be used. When only one agency rates a security that rating will be used. Duration The manager will maintain the portfolio duration within +/-25% of the Bloomberg Barclays U.S. Aggregate Bond IndexbeRGhmark duration at all times for the individual securities portfolio. Diversification • No more than 5% of the portfolio assets may be invested in any individual issuer, with the exception of securities issued or guaranteed by the U.S. Government, its agencies, and Government Sponsored Enterprises. No more than 340% of the portfolio may be invested in securities issued under Rule 144A*without registration rights (no limit on Rule 144a securities with registration rights). *Note: Rule 144A is an administrative rule under the SEC allowing, under certain circumstances,for qualified institutional investors to trade certain securities with other institutional investors without registering the trade with the SEC. Specifically,the rule allows private companies, both domestic and international,to sell unregistered securities,also known as Rule 144 securities,to qualified institution buyers(QIBs)through a broker-dealer. Performance Benchmarks: The performance of the total Plan shall be measured over a three and five-year periods. These periods are considered sufficient to accommodate the market cycles experienced with investments. The performance shall be compared to the return of the total portfolio blended benchmark shown below. Total Portfolio Blended Benchmark 26.50% S&P500Index 5.00% Russell Mid Cap Index 7.50% Russell 2000 Index 3.25% MSCI Emerging Market Index 6.00% MSCI EAFE Index 1.75% Wilshire REIT Index 33.50% Bloomberg Barclays US Aggregate Bond Index 10.00% ML 1-3 Year US Corp/Gov't Index 1.50% US High Yield Master II Central Contra Costa County Sanitary District—GASR^F Other Post-Employment Benefits Trust Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 5 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 21 of 46 Page 19 of 28 5.00% Citi 1 Mth T-Bill Asset Class/Style Benchmarks Over a market cycle, the long-term objective for each investment strategy is to add value to a market benchmark. The following are the benchmarks used to monitor each investment strategy: Large Cap Equity S&P 500 Index Mid Cap Equity Russell Mid Cap Index Growth Russell Mid Cap Growth Index Value Russell Mid Cap Value Index Small Cap Equity Russell 2000 Index Growth Russell 2000 Growth Index Value Russell 2000 Value Index REITs Wilshire REIT Index International Equity MSCI EAFE Index Investment Grade Bonds Bloomberg Barclays US Aggregate Bond Index High Yield US High Yield Master II Security Selection Investment Manager may utilize a full range of investment vehicles when constructing the investment portfolio, including but not limited to individual securities, mutual funds, and exchange- traded funds. In addition, to the extent permissible, Investment Manager is authorized to invest in shares of mutual funds in which the Investment Manager serves as advisor or subadvisersub adviser. Investment Limitations: The following investment transactions are prohibited: • Direct investments in precious metals (precious metals mutual funds and exchange-traded funds are permissible). • Venture Capital • Short sales* • Purchases of Letter Stock, Private Placements, or direct payments • Leveraged Transactions* • Commodities Transactions Puts, calls, straddles, or other option strategies* • Purchases of real estate, with the exception of REITs • Derivatives, with exception of ETFs* *Permissible in diversified mutual funds and exchange-traded funds Duties and Responsibilities Responsibilities of Plan Sponsor The Finance Committee of the Central Contra Costa Sanitary District is responsible for: ■ Confirming the accuracy of this Investment Guidelines Document, in writing. Central Contra Costa County Sanitary District—GASB^F Other Post-Employment Benefits Trust Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 6 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 22 of 46 Page 20 of 28 ■ Advising Trustee and Investment Manager of any change in the plan/account's financial situation, funding status, or cash flows, which could possibly necessitate a change to the account's overall risk tolerance, time horizon or liquidity requirements; and thus would dictate a change to the overall investment objective and goals for the account. ■ Providing Trustee and Investment Manager with an approved IPS for the account and providing any updates to the IPS. ■ Monitoring and supervising all service vendors and investment options, including investment managers. ■ Avoiding prohibited transactions and conflicts of interest. Responsibilities of Trustee The plan Trustee is responsible for: ■ Valuing the holdings. ■ Collecting all income and dividends owed to the Plan. ■ Settling all transactions (buy-sell orders). Responsibilities of Investment Manager The Investment Manager is responsible for: ■ Assisting the Finance Committee with the development and maintenance of this Investment Policy Guideline document annually. ■ Meeting with the Finance Committee semi-annually to review portfolio structure, holdings, and performance. ■ Designing, recommending and implementing an appropriate asset allocation consistent with the investment objectives, time horizon, risk profile, guidelines and constraints outlined in this statement. ■ Researching and monitoring investment advisers and investment vehicles. ■ Purchasing, selling, and reinvesting in securities held in the account. ■ Monitoring the performance of all selected assets. ■ Voting proxies, if applicable. ■ Recommending changes to any of the above. ■ Periodically reviewing the suitability of the investments, being available to meet with the Finance Committee at least twice a year, and being available at such other times within reason at your request. ■ Preparing and presenting appropriate reports. ■ Informing the Finance Committee if changes occur in personnel that are responsible for portfolio management or research. Acknowledgement and Acceptance I/We being the Plan Sponsor with responsibility for the account(s) held on behalf of the Plan Sponsor specified below, designate Investment Manager as having the investment discretion and management responsibility indicated in relation to all assets of the Plan or specified Account. If such designation is set forth in the Plan/trust, I/We hereby confirm such designation as Investment Manager. Central Contra Costa County Sanitary District—GASB^F Other Post-Employment Benefits Trust Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 7 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 23 of 46 Page 21 of 28 1 have read the Investment Guidelines Document, and confirm the accuracy of it, including the terms and conditions under which the assets in this account are to be held, managed, and disposed of by Investment Manager. This Investment Guidelines Document supersedes all previous versions of an Investment Guidelines Document or investment objective instructions that may have been executed for this account. Date: Plan Sponsor: Tad J. Pilecki, Central Contra County Sanitary District Board President Date: Investment Manager: Andrew Brown, CFA, Senior Portfolio Manager, (415) 705-7605 Central Contra Costa County Sanitary District—GASB^F Other Post-Employment Benefits Trust Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 8 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 24 of 46 Page 22 of 28 Attachment 3 HIGHMARKO CAPITAL MANAGEMENT Investment Guidelines Document Central Contra Costa County Sanitary District Pension Prefunding Trust glk Last Revised August 20201 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 25 of 46 Page 23 of 28 Investment Guidelines Document Scope and Purpose The purpose of this Investment Guidelines Document is to: • Facilitate the process of ongoing communication between the Plan Sponsor and its plan fiduciaries; • Confirm the Plan's investment goals and objectives and management policies applicable to the investment portfolio identified below and obtained from the Plan Sponsor; • Provide a framework to construct a well-diversified asset mix that can potentially be expected to meet the account's short- and long-term needs that is consistent with the account's investment objectives, liquidity considerations and risk tolerance; • Identify any unique considerations that may restrict or limit the investment discretion of its designated investment managers; • Help maintain a long-term perspective when market volatility is caused by short-term market movements. • Assist the Plan Sponsor in formulating an Investment Policy Statement("IPS")for the account. Key Plan Sponsor Account Information as of August 20212020 Plan Sponsor: Central Contra Costa County Sanitary District Governance: Board of Directors of the Central Contra Costa County Sanitary District Plan Name("Plan"): Central Contra Costa County Sanitary District Employee Benefits Pension Plan Trustee: US Bank Contact: Susan Hughes, 949-224-7209 Susan.Hughes(@Usbank.com Account Number("Account"):6746055901 Type of Account: Pension Plan ERISA Status: Not subject to ERISA Market Value of Account: $47,89510�23 as of August 23, 2021'F�o Investment Manager: US Bank, as discretionary trustee, has delegated investment management responsibilities to HighMark Capital Management, Inc. ("Investment Manager"), an SEC-registered investment adviser Contact: Andrew Brown, CFA, 415-705-7605 or 925-683-8366 Andrew.brown@highmarkcapital.com Central Contra Costa County Sanitary District—Employee Benefits Pension Plan Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 2 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 26 of 46 Page 24 of 28 Investment Authority: Except as otherwise noted, the Trustee, US Bank, has delegated investment authority to HighMark Capital Management, an SEC-registered investment adviser. Investment Manager has full investment discretion over the managed assets in the account. Investment Manager is authorized to purchase, sell, exchange, invest, reinvest and manage the designated assets held in the account, all in accordance with account's investment objectives, without prior approval or subsequent approval of any other party(ies). Investment Objectives and Constraints The goal of the Plan's investment program is to provide a reasonable level of growth which, will result in sufficient assets to pay the present and future obligations of the Plan. The following objectives are intended to assist in achieving this goal: • The Plan should seek to earn a return in excess of its policy benchmark over the life of the Plan. • The long-term expected rate of return for the target allocation for the Plan's Moderately Conservative investment objective currently is 5.145-. 2%. This should not be confused with the expected rate of return for the CCCERA Pension Plan. • The Plan's assets will be managed on a total return basis which takes into consideration both investment income and capital appreciation. While the Plan Sponsor recognizes the importance of preservation of capital, it also adheres to the principle that varying degrees of investment risk are generally rewarded with compensating returns. To achieve these objectives, the Plan Sponsor allocates its assets (asset allocation)with a strategic perspective of the capital markets. Investment Time Horizon: Over 10 years Anticipated Cash Flows: The initial contribution into the Plan was $3.35 million with subsequent contributions totaling an estimated $5.5 million. This has resulted in a total of approximately$8.83 million in contributions to date as of May 2020. Assets in the Plan will seek to mitigate the impact of future rate increases from CCCERA. On June 23, 2021 $12,763,669 was transferred to the CCCERA Plan. Typically increases on rates come with a one year orlvaRGe w g hew ever this RaR may transfer assets to ('GGERA of oRy time Target rate of return: 5.145-.82% annual target Investment Objective: The primary objective is to generate a reasonable level of growth. The assets in this Plan will eventually be used to fund Pension Plan obligations for assets managed in the CCCERA Trust. Risk Tolerance: Moderately Conservative The account's risk tolerance has been rated moderately conservative, which demonstrates that the account can accept some price fluctuations to pursue its investment objectives. Central Contra Costa County Sanitary District—Employee Benefits Pension Plan Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 3 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 27 of 46 Page 25 of 28 Strategic Asset Allocation: The asset allocation ranges for this objective are listed below: Strategic Asset Allocation Ranges Cash Fixed Income Equity 0-20% 50%-80% 20%-40% Policy: 5% Policy: 65% Policy: 30% Market conditions may cause the account's asset allocation to vary from the stated range from time to time. The Investment Manager will rebalance the portfolio no less than quarterly and/or when the actual weighting differs substantially from the strategic range, if appropriate and consistent with your objectives. Security Guidelines: Equities With the exception of limitations and constraints described above, Investment Manager may allocate assets of the equity portion of the account among various market capitalizations (large, mid, small) and investment styles (value, growth). Further, Investment Manager may allocate assets among domestic, international developed and emerging market equity securities. Total Equities 20%-40% Equity Style Range Domestic Large Cap Equity 10%-30% Domestic Mid Cap Equity 0%-10% Domestic Small Cap Equity 0%-12% International Equity (incl. Emerging Markets) 0%-12% Real Estate Investment Trust(REIT) 0%-8% Fixed Income In the fixed income portion of the account, Investment Manager may allocate assets among various sectors and industries, as well as varying maturities and credit quality that are consistent with the overall goals and objectives of the portfolio. Total Fixed Income 50%-80% Eligible Investments • Debt obligations of the U.S. Government, its agencies, and Government Sponsored Enterprises • Mortgage-Backed Securities (MBS) • Asset Backed Securities (ABS) • Collateralized Mortgage Obligations (CMO) • Commercial Mortgage-Backed Securities (CMBS) • Corporate debt securities issued by U.S. or foreign entities including, but not limited to, limited partnerships, equipment trust certificates and enhanced equipment trust certificates Central Contra Costa County Sanitary District—Employee Benefits Pension Plan Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 4 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 28 of 46 Page 26 of 28 • Eligible instruments issued pursuant to SEC Rule 144(a) • Municipal Bonds Quality The individual securities portfolio will maintain a minimum weighted average effective quality of A- at all times. At the time of purchase, i-4ndividual securities shall have a minimum effective quality rating of Baa3 by nnood or BBB- Duration The manager will maintain the portfolio duration within +/-25% of the Bloomberg Barclays U.S. Aggregate Bond Index benchmark duration at all times for the individual securities portfolio. Diversification • No more than 5% of the portfolio assets may be invested in any individual issuer, with the exception of securities issued or guaranteed by the U.S. Government, its agencies, and Government Sponsored Enterprises. No more than 340% of the portfolio may be invested in securities issued under Rule 144A*without registration rights (no limit on Rule 144a securities with registration rights). Note: Rule 144A is an administrative rule under the SEC allowing, under certain circumstances,for qualified institutional investors to trade certain securities with other institutional investors without registering the trade with the SEC. Specifically,the rule allows private companies, both domestic and international,to sell unregistered securities,also known as Rule 144 securities,to qualified institution buyers(QIBs)through a broker-dealer. Performance Benchmarks: The performance of the total Plan shall be measured over a three and five-year periods. These periods are considered sufficient to accommodate the market cycles experienced with investments. The performance shall be compared to the return of the total portfolio blended benchmark shown below. Total Portfolio Blended Benchmark 15.5% S&P500Index 3.00% Russell Mid Cap Index 4.50% Russell 2000 Index 2.00% MSCI Emerging Market Index 4.00% MSCI EAFE Index 1.00% Wilshire REIT Index 49.25% Bloomberg Barclays US Aggregate Bond Index 14.00% MIL 1-3 Year US Corp/Gov't Index 1.75% US High Yield Master II 5.00% Citi 1 Mth T-Bill Asset Class/Style Benchmarks Over a market cycle, the long-term objective for each investment strategy is to add value to a market benchmark. The following are the benchmarks used to monitor each investment strategy: Large Cap Equity S&P 500 Index Growth S&P 500 Growth Index Value S&P 500 Value Index Central Contra Costa County Sanitary District—Employee Benefits Pension Plan Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 5 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 29 of 46 Page 27 of 28 Mid Cap Equity Russell Mid Cap Index Growth Russell Mid Cap Growth Index Value Russell Mid Cap Value Index Small Cap Equity Russell 2000 Index Growth Russell 2000 Growth Index Value Russell 2000 Value Index REITs Wilshire REIT Index International Equity MSCI EAFE Index Investment Grade Bonds Bloomberg Barclays US Aggregate Bond Index High Yield US High Yield Master II Security Selection Investment Manager may utilize a full range of investment vehicles when constructing the investment portfolio, including but not limited to individual securities, mutual funds, and exchange- traded funds. In addition, to the extent permissible, Investment Manager is authorized to invest in shares of mutual funds in which the Investment Manager serves as advisor or subadviser. Investment Limitations: The following investment transactions are prohibited: • Direct investments in precious metals (precious metals mutual funds and exchange-traded funds are permissible). • Venture Capital • Short sales* • Purchases of Letter Stock, Private Placements, or direct payments • Leveraged Transactions* • Commodities Transactions Puts, calls, straddles, or other option strategies* • Purchases of real estate, with the exception of REITs • Derivatives, with exception of ETFs* *Permissible in diversified mutual funds and exchange-traded funds Duties and Responsibilities Responsibilities of Plan Sponsor The Finance Committee of the Central Contra Costa Sanitary District is responsible for: ■ Confirming the accuracy of this Investment Guidelines Document, in writing. ■ Advising Trustee and Investment Manager of any change in the plan/account's financial situation, funding status, or cash flows, which could possibly necessitate a change to the account's overall risk tolerance, time horizon or liquidity requirements; and thus would dictate a change to the overall investment objective and goals for the account. ■ Providing Trustee and Investment Manager with an approved IPS for the account and providing any updates to the IPS. ■ Monitoring and supervising all service vendors and investment options, including investment managers. ■ Avoiding prohibited transactions and conflicts of interest. Responsibilities of Trustee Central Contra Costa County Sanitary District—Employee Benefits Pension Plan Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 6 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 30 of 46 Page 28 of 28 The plan Trustee is responsible for: • Valuing the holdings. ■ Collecting all income and dividends owed to the Plan. • Settling all transactions (buy-sell orders). Responsibilities of Investment Manager The Investment Manager is responsible for: ■ Assisting the Finance Committee with the development and maintenance of this Investment Policy Guideline document annually. ■ Meeting with the Finance Committee semi-annually to review portfolio structure, holdings, and performance. ■ Designing, recommending and implementing an appropriate asset allocation consistent with the investment objectives, time horizon, risk profile, guidelines and constraints outlined in this statement. ■ Researching and monitoring investment advisers and investment vehicles. ■ Purchasing, selling, and reinvesting in securities held in the account. ■ Monitoring the performance of all selected assets. ■ Voting proxies, if applicable. ■ Recommending changes to any of the above. ■ Periodically reviewing the suitability of the investments, being available to meet with the committee at least twice a year, and being available at such other times within reason at your request. ■ Preparing and presenting appropriate reports. ■ Informing the committee if changes occur in personnel that are responsible for portfolio management or research. Acknowledgement and Acceptance I/We being the Plan Sponsor with responsibility for the account(s) held on behalf of the Plan Sponsor specified below, designate Investment Manager as having the investment discretion and management responsibility indicated in relation to all assets of the Plan or specified Account. If such designation is set forth in the Plan/trust, I/We hereby confirm such designation as Investment Manager. I have read the Investment Guidelines Document, and confirm the accuracy of it, including the terms and conditions under which the assets in this account are to be held, managed, and disposed of by Investment Manager. This Investment Guidelines Document supersedes all previous versions of an Investment Guidelines Document or investment objective instructions that may have been executed for this account. Date: Plan Sponsor: Tad J. Pilecki, Central Contra County Sanitary District Board President Date: Investment Manager: Andrew Brown, CFA, Senior Portfolio Manager, (415) 705-7605 Central Contra Costa County Sanitary District—Employee Benefits Pension Plan Investment Guidelines Document—HighMark Capital Management, Inc. (v.July 2018 ARB) Revised August 20212020 7 September 20, 2021 Special ADMIN Committee Meeting Agenda Packet- Page 31 of 46