HomeMy WebLinkAbout05. Adopt proposed revisions to BP 005 - Investment Policy and OPEB and Pension Pre-funding Trust Guidelines Page 1 of 28
Item 5.
CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
MEETING DATE: OCTOBER 7, 2021
SUBJECT: ADOPT 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: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
Roger S. Bailey
General Manager
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.
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Although no longer required by statute, it has been Central San's practice and policy to render an annual
Statement of Investment 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 (CD I AC)to ensure Central San is in
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 CD I AC, as
well as California Government 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 SB 998 are not
impactful to Central San, the one noteworthy change was a slight increase in 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
reaching the $75 million investment cap imposed by LAI F, staff believes CAMP would provide an
advantageous highly liquid 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 GASB 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
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FD I C insured ($250,000 limit), consistent with other California municipal investment policies.
• I ncrease the limit of Commercial Paper or Medium Term Notes issued by a single issuer from 5% to
10% of the total Central San portfolio, to reflect changes to Califomia Govemment Code section
53601 effectuated by SB 998.
• Add "California Asset Management Program" and "CalTrust" in description of "Government Pools"
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 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
I nvestment Advisor, staff proposes the following edits to the O P E B Trust I G D 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 5.75% discount rate used in the latest OPEB actuarial
funding report issued by Bartel with no change to the currently effective and unchanged "moderate"
investment risk tolerance level of the trust.
• 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
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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
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 5.14% to reflect the latest long-term capital market return
assumptions employed by HighMark for currently effective and unchanged "moderately
conservative" investment risk tolerance level of the trust.
• 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
recommends Board approval. The Finance Committee requested that staff return at a later date to revisit
the portfolio objectives/ investment risk tolerance level of the Pension Prefunding Trust in light of the
payoff of the UAAL.
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RECOMMENDED BOARD ACTION
Approve the 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
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)
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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.
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Number: BP 005
STATEMENT OF INVESTMENT POLICY
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• 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
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Number: BP 005
STATEMENT OF INVESTMENT POLICY
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(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 CertificateTime 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.
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Number: BP 005
STATEMENT OF INVESTMENT POLICY
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• 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 collateralization, 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 -510% of its total investment assets in
the commercial paper of the eutstanding 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 Dictrint'o total investment nertfelie may be invested in
the debt of any one nerneratien 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
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Number: BP 005
STATEMENT OF INVESTMENT POLICY
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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.
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Number: BP 005
STATEMENT OF INVESTMENT POLICY
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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.
VII. 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.
VIII. 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
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Number: BP 005
STATEMENT OF INVESTMENT POLICY
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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.
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Number: BP 005
STATEMENT OF INVESTMENT POLICY
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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]
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Attachment 2
HIGHMARKO
CAPITAL MANAGEMENT
Investment Guidelines Document
Central Contra Costa County Sanitary District
GASB SB '' S / Other Post-Employment Benefits Trust
EE
Last-Revised August 20210
October 7, 2021 Regular Board Meeting Agenda Packet- Page 82 of 200
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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 20212-029
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 45 Other Post-Employment Benefits Trust
Trustee: US Bank
Contact: Susan Hughes, 949-224-7209
Susan.Hughes(@Usbank.com
Account Number("Account"):6746055900
Type of Account: GASB45Other Post-Employment Benefits Trust
ERISA Status: Not subject to ERISA
Market Value of Account: $85,489,1717380 as of August 23, 202125, 2020
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 83 of 200
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 5.7565%.
• 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'eal„y,
Thethe Plan has modest monthly not implemented any liquidity
requirements for beneficiary distributions. QGGasienall„a^
additiGRal a o_timo Gentrib ltiGR 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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 84 of 200
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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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 85 of 200
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—GASB^F Other Post-Employment Benefits Trust
Investment Guidelines Document—HighMark Capital Management, Inc.
(v.July 2018 ARB) Revised August 20212020 5
October 7, 2021 Regular Board Meeting Agenda Packet- Page 86 of 200
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 87 of 200
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■ 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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 88 of 200
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 89 of 200
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 90 of 200
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 20212-029
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.Hug hes(@Usbank.com
Account Number("Account"):6746055901
Type of Account: Pension Plan
ERISA Status: Not subject to ERISA
Market Value of Account: $47,89510,696,323 as of August 23, 202125, 2020
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 91 of 200
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-:82%. 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 inGFeases on rates come with a one
year orlvaRGe w g hewever this RaR may transfer assets to
GGGCDA 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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 92 of 200
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 93 of 200
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 Moody's 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% ML 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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 94 of 200
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 95 of 200
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
October 7, 2021 Regular Board Meeting Agenda Packet- Page 96 of 200