HomeMy WebLinkAboutElected Officials' Retirement System, City of Baltimore - Public Financial ReportPopular Annual
Financial Report
Year Ended June 30, 2021
Pension Trust of the City of Baltimore
ELECTED OFFICIALS’
RETIREMENT SYSTEM
City of Baltimore, Maryland
Introduction
PAFR 2021 Page | 1
We are pleased to present The Popular Annual Financial Report (PAFR) of EOS (Elected Officials Retirement System of
the City of Baltimore). This report is a summary of fiscal year 2021 ACFR (Annual Comprehensive Financial Report). The
ACFR was prepared in conformity with GAAP, but the PAFR includes only selected information from the ACFR. The
PAFR has been mailed to all retirees, email blasted to all active members and available on our website at www.bcers.org/elected-officials-retirement-system. For a detailed copy of our financials, please visit our website at
www.bcers.org/elected-officials-retirement-system.
Introduction……………..…............1
Plan Description……….……….…...2
Financials.…….……………..……...3-5
Investments……….…..………..….6-8
Actuarial………. …….…………….9-10
As we have adjusted our
operations in the wake of
the many changes and
challenges we face in a
post-pandemic world, our
staff remains dedicated to
serving the City of
Baltimore’s active
members, retirees, and
beneficiaries.
Fiscal year 2021 was a
comeback year for EOS
as the world continues
to recover from the
economic impact of the
Covid-19 pandemic. We
saw historic returns with
investments for the
fiscal year ending June
30, 2021, returning
We have continued to employ a hybrid schedule,
ensuring that through both onsite and remote
operations, we are able to respond to the needs of our
entire membership.
This year, we updated our mission statement to reflect an
increased focus on the importance of Environmental,
Social and Governance (ESG) investing. This need to
balance social responsibility with our duty to provide
strong, long-term investment results aligns with the
passage of Ordinance 21-043, Fossil Fuel Divestment,
which was signed into law on October 1, 2021.
I would like to share my appreciation to outgoing Board
Chair Henry Raymond for his vision, guidance, and
leadership. I am incredibly grateful to our Board of
Trustees, ERS staff and advisors for their continued
dedication to the successful management of the System.
David A. Randall, Executive Director
29.0%. The market value funded ratio for ERS is now
168.2%.
The board continues to be dedicated to our mission to
serve our members, retirees and beneficiaries and
protect and grow the fund’s assets as we continue to
navigate the economic recovery and impact of Covid-
19.
I would like to extend my gratitude to the Retirement
system staff for their commitment to providing
exceptional service.
This will be my last letter on behalf of EOS as my term
as Chair expires on December 31, 2021. It has been my
great pleasure to serve as Chair, and I am incredibly
grateful to have had the opportunity to lead the
System’s board and staff.
Henry J. Raymond, Chair, Board of Trustees
PAFR 2021
The Plan
PAFR 2021 Page | 2
The Elected Officials' Retirement System of the City of Baltimore (EOS) is the administrator of a single-
employer defined benefit local government retirement plan (the Plan). EOS plan was established effective
December 5, 1983, by City Ordinance 1105. Any elected official who is not a member of the Employees’
Retirement System of the City of Baltimore (ERS), upon taking the oath of office, automatically becomes
a member. Any elected official who is a member of ERS has the option of electing, within 120 days of
taking the oath of office, to become a member of EOS.
Based on criteria established by the Governmental Accounting Standards Board, the EOS is a Pension Trust
of the City of Baltimore and is included in the City's financial report as a Public Employee’s Retirement
System (PERS).
On June 30, 2021, the membership consisted of 31 retirees and beneficiaries, 16 active members and no
deferred vested member.
EOS members contribute 5% of their earnable compensation. However, no contribution is required after
the member has attained age 60 and acquired 35 years of service. Earnable compensation is the annual
salary authorized for the member, not including overtime or other types of pay.
In 2016, member benefits were revised per Article 22 as follows:
S/N Criteria Elected on/or before
December 5, 2016
Elected after December 5, 2016
1 Retirement
eligibility
Age 50 Age 55
2 Salary Increases Indexed to compensation
of the position held prior
to retirement.
COLA – Higher of 1.5% and rates in effect for
F&P retirement system; and waiting period of
1 year.
3 Cap N/A 60% of compensation at retirement.
PAFR 2021
Financials
PAFR 2021 Page | 3
The statement of fiduciary net position presents the Plan’s assets and liabilities and the net position
restricted for pensions on June 30, 2021. The assets comprise cash and cash equivalents, receivables
(mainly from investments sold), and fair value of investments, while liabilities comprise payables (mainly
management fees and administrative expenses).
On June 30, 2021, the fiduciary net position restricted for pensions was $31.2 million. The fiduciary net
position restricted for pension increased by $5.8 million or 23.0% when compared with fiscal year 2020‘s
net position of $25.3 million. The increase is due to the stock market rebound driven primarily by strong
earnings.
The statement of changes in fiduciary net position presents information on how the Plan’s net position
changed during the year. In fiscal year 2021, the fiduciary net position increased by $5.8 million. When
compared with the fiscal year 2020 decrease of $793K, this was an increase of $6.6 million as
highlighted below.
Plan members' contributions are recognized in the period in which the contributions are due. Employer
contributions are recognized when a formal commitment has been made by the City of Baltimore to
Fiduciary Net Position Fiscal Year
2021
Fiscal Year
2020
Increase /
(Decrease)
Percentage
Increase
Investments $ 30,736,416 $ 25,116,902 $ 5,619,514 22.4%
Other Assets 423,966 225,601 198,365 88%
Total assets 31,160,382 25,342,503 5,817,879 23.0%
Total liabilities 7,963 13,081 (5,118)-39.1%
Total net position $31,152,419 $25,329,422 $5,822,997 23.0%
PAFR 2021
Financials
PAFR 2021 Page | 4
provide the contributions. All investment gains and losses are shown at trade date. Both realized and
unrealized gains and losses are shown on the investments. Benefits and refunds are recognized when due
and payable in accordance with the terms of the Plan.
Changes in Fiduciary Net
Position
Fiscal Year
2021
Fiscal Year
2020
Increase /
(Decrease)
Net Investment Income $ 7,085,609 $ 293,606 $ 6,792,003
Employee contribution 77,423 75,939 1,484
Total additions 7,163,032 369,545 6,793,487
Retirement allowances 1,305,575 1,125,136 180,439
Administrative expenses 34,460 37,251 (2,791)
Total deductions 1,340,035 1,162,387 177,648
Net increases (decreases) $5,822,997 $(792,842) $6,615,839
PAFR 2021
Financials
PAFR 2021 Page | 5
Revenues (Additions to Fiduciary Net Position) for the year were $7,163,032, an increase of $6,793,487
from the prior year due to higher investment returns. Revenues include plan members’ contributions of
$77,423 and a net investment gain of $7,085,609.
The employer contribution is determined by an actuarial valuation. This contribution could be zero when
the actuarial value of assets is greater than the accrued liabilities and the amortization of the surplus is
greater than the annual cost of the Plan.
In fiscal year 2021, the employer contribution remained at zero because the actuarially determined
employer contribution for fiscal year 2021 was set at $0. Employee contributions increased by 2%; and
investments also produced a positive return of $7,085,609 compared to fiscal year 2020 return of
$293,606.
The Plan was created to provide lifetime service retirement benefits, survivor benefits and permanent
disability benefits to eligible Plan members and their beneficiaries. The cost of such programs includes
recurring benefit payments, lump-sum death benefits, payments to terminated members, and the
administrative expenses of the Plan.
The primary source of expense during fiscal year 2021 was for the payment of continuing retirement
benefits totaling $1,305,575, which increased by $180,439 compared to fiscal year 2020. The increase was
due to new retirees that started receiving benefits as well as cost of living adjustments.
PAFR 2021
Investments
PAFR 2021 Page | 6
The primary investment objectives of EOS are to preserve the capital value of the plan assets adjusted for
inflation, ensure adequate plan liquidity, and to meet and/or exceed both actuarial interest rate
assumptions and investment return benchmark as determined by the Board of Trustees. It is recognized
that maximizing any one objective may compromise the achievement of other objectives, for example,
maximizing liquidity may reduce investment return. The objectives are thus considered and adhered to in
descending order of priority.
The overall stock market rebounded significantly over the past fiscal year driven primarily by strong
earnings growth, continued fiscal and monetary stimulus, and progress towards addressing the global
health pandemic. The U.S. stock market, as proxied by the Russell 3000 Index, posted a return of 44.2%.
In a reversal from the prior year, small cap stocks and value-oriented investment styles fared best.
International stocks posted a return of 36.3%, as proxied by the MSCI ACWI ex U.S. Index, as markets
rebounded. However, as bond yields rose sharply earlier in the year, the bond market posted a slightly
negative return of -0.3%. Real estate returned 7.4% as both income and appreciation returns were
positive.
For the fiscal year ending June 30, 2021, the System posted a return of 29.0%, outperforming the policy
benchmark of 24.1%. The fixed income portfolio’s exposure to floating rate issues added value as the bond
market was negatively impacted by rising rates. Within the domestic equity portfolio, an overweight
position in small cap issues also positively impacted returns as small company stocks outpaced their larger
counterparts. The international equity portfolio also outpaced its benchmark due to exposure to small-
cap international stocks.
FY 2021 3 Years 5 Years 10 Years
Total Portfolio 29.0% 11.0% 11.4% 9.1%
Median Public Pension Fund 24.1% 10.9% 10.8% 8.7%
Domestic Equities 48.8% 17.1% 17.3% 14.0%
Russell 3000 44.2% 18.7% 17.9% 14.7%
Defensive Equities 26.8% 11.1% - -
CBOE Put Write Index 29.6% 6.5% 7.5% 7.5%
50% S&P 500/50% 91 Day T-Bill 19.1% 10.1% 9.4% 7.7%
International Equities 38.6% 9.3% 11.7% 7.0%
MSCI ACWI ex-US 36.3% 9.9% 11.6% 5.9%
Fixed Income 4.0% 5.2% 3.8% 3.7%
Barclays Aggregate -0.3% 5.3% 3.0% 3.4%
Real Estate 7.3% 6.0% 6.7% -
NPI 3.7% 4.3% 5.4% 8.4%
PAFR 2021
Investments
PAFR 2021 Page | 7
On June 21, 2016, Ordinance 16-488 was signed into law. The Bill changed the assumed interest rate for
the Plan investments from 7.25% to 7.00% for fiscal years beginning July 1, 2016, and July 1, 2017. In fiscal
year beginning on and after July 1, 2018, the assumed interest was changed 6.75%.
The EOS Plan is well-positioned to achieve the investment objectives as outlined by the Board of Trustees.
In the last five years, EOS outperformed both the benchmark and actuarial assumption three times but
lagged two years.
Diversification is the most important component of reaching long-range financial goals. To assist in
meeting the overall objectives, the Board of Trustees approved an asset allocation guideline. The asset
allocation guideline enables the Plan to diversify its assets and maximize returns by investing in different
areas that would each react differently to the same event.
The asset allocation structure is diversified along domestic and international equity asset classes. In
domestic equity, the asset allocation has exposure to large, mid, and small-cap equity. In international
equity, the asset allocation has exposure to large and small equity and emerging markets. In fixed income,
the asset allocation has exposure to investment grade core bonds and bank loans. The Trustees have
employed both active and passive investment strategies to obtain the desired asset allocation mix in the
most cost-effective and efficient manner.
PAFR 2021
Investments
PAFR 2021 Page | 8
The current EOS asset allocation policy and actual allocation is as stated below.
Target Actual
US Fixed Income 22% 22%
US Large Equity 19% 20%
US Mid Equity 7.5% 7%
US Small Equity 7.5% 7%
Non-US Small Equity 11% 10%
Non-US large Equity 10% 10%
Real Estate 10% 9%
Defensive Equity 13% 13%
cash 0% 2%
100% 100%
Target Asset
Allocation
Actual Asset
Allocation
PAFR 2021
Actuarial
The Plan’s funding objective is to meet long-term benefit obligations through investment income and
contributions, which spread the cost over the employees’ service base. EOS’ funding status is a key
indicator of its financial health because it reflects the percentage of benefits due that the Plan’s assets
can cover.
Due to the relatively small membership subject to elected terms, the valuation results are expected to
exhibit material volatility from year to year. The Plan experienced shifts in the population from 2021 to
2021 due to the election of a new term and included four retirements, five new active members and two
non-vested terminations.
As of June 30, 2021, the funded ratio of actuarial asset value to actuarial liability decreased from 152.2%
to 151.4%. The decrease is based on net asset gains from the smoothed asset value, offset by experience
losses due to changes in membership. However, the funded ratio-based on market value of assets
increased from 145.7% to 168.2% due to investment earnings of 28.5%.
Experience study is conducted by the System every four years. The study compares actual experience to
assumptions of both demographic and economic assumptions to determine whether adjustments are
required. The demographic changes adopted in 2019 includes rates of retirement, termination rates,
disability rates, post-retirement mortality as well as survivor data drop-offs while economic assumption
changes include discount rate, inflation and salary increases.
2017 2018 2019 2020 2021
Total Pension Liability 14,946,399$ 15,260,985$ 17,001,212$ 17,382,855$ 18,522,088$
Plan Fiduciary Net Position 24,966,221 26,197,456 26,122,264 25,329,422 31,152,419
Net Pension Assets 10,019,822$ 10,936,471$ 9,121,052$ 7,946,567$ 12,630,331$
P a g e | 9 PAFR 2021
Actuarial
2021 2020 2019 2018 2017
Actuarially determined contribution -$ -$ -$ -$ -$
Actual employer Contributions - - - - -
Contribution deficiency (excess)-$ -$ -$ -$ -$
Covered payroll 1,431,497$ 1,469,551$ 1,362,517$ 1,398,738$ 1,296,866$
Contributions as a percentage of payroll 0.00% 0.00% 0.00% 0.00% 0.00%
$0
$77,423
$34,460 $1,305,575
$7,051,149
P a g e | 10 PAFR 2021
CITY OF BALTIMOREEmployees’ Retirement Systems7 East Redwood Street, 11th, 12th &13th FloorBaltimore, MD 21202
Henry RaymondChair of the Board City of Baltimore Finance DirectorEx-officio Member
Bill Henry ComptrollerEx-officio Member
Deborah F. Moore-CarterCity of Baltimore Labor CommissionerElected by Active Mem-bers
Patricia RobertsRetired Appointed by Mayor
Dorothy L. BryantPhlebotomistCity of Baltimore Health DepartmentElected by Active Members
TRUSTEES
Helen HoltonRetiredAppointed by Mayor/Baltimore City Council
Rosemary H. AtkinsonRetiredHOPE VI Community BuilderElected by Retired Mem-bers
John Beasley DeloitteAppointed by Mayor/Baltimore City Council This Popular Annual Report (PAFR) is a sum-
mary presentation of the Employees Retirement
System of the City of Baltimore’s audited finan-
cial statements and other information contained
in the Comprehensive Annual Financial Report
(ACFR). The PAFR provides an overview of the
System’s financial and operating results. The
complete audited financial statements and
pertinent notes to the financial statements can
be found in the 2021 ACFR.
+1 443-984-3200
+1 877-273-7136
contacters@bcers.org
www.bcers.org @bmoreretirement
Government Finance Officers Association
Award for Outstanding Achievement in Popular Annual Financial Reporting
Presented to the
Elected Officials Retirement System, City of Baltimore
Maryland
For its Annual Financial Report
for the Fiscal Year Ended 2020
Executive Director/CEO
CITY OF BALTIMOREEmployees’ Retirement Systems7 East Redwood Street, 11th, 12th &13th FloorBaltimore, MD 21202
Henry RaymondChair of the Board City of Baltimore Finance DirectorEx-officio Member
Bill Henry ComptrollerEx-officio Member
Deborah F. Moore-CarterCity of Baltimore Labor CommissionerElected by Active Mem-bers
Patricia RobertsRetired Appointed by Mayor
Dorothy L. BryantPhlebotomistCity of Baltimore Health DepartmentElected by Active Members
TRUSTEES
Helen HoltonRetiredAppointed by Mayor/Baltimore City Council
Rosemary H. AtkinsonRetiredHOPE VI Community BuilderElected by Retired Mem-bers
John Beasley DeloitteAppointed by Mayor/Baltimore City Council This Popular Annual Report (PAFR) is a sum-
mary presentation of the Employees Retirement
System of the City of Baltimore’s audited finan-
cial statements and other information contained
in the Comprehensive Annual Financial Report
(ACFR). The PAFR provides an overview of the
System’s financial and operating results. The
complete audited financial statements and
pertinent notes to the financial statements can
be found in the 2021 ACFR.
+1 443-984-3200
+1 877-273-7136
contacters@bcers.org
www.bcers.org @bmoreretirement
Government Finance Officers Association
Award for Outstanding Achievement in Popular Annual Financial Reporting
Presented to the
Elected Officials Retirement System, City of Baltimore
Maryland
For its Annual Financial Report
for the Fiscal Year Ended 2020
Executive Director/CEO
CITY OF BALTIMOREEmployees’ Retirement Systems7 East Redwood Street, 11th, 12th &13th FloorBaltimore, MD 21202
Henry RaymondChair of the Board City of Baltimore Finance DirectorEx-officio Member
Bill Henry ComptrollerEx-officio Member
Deborah F. Moore-CarterCity of Baltimore Labor CommissionerElected by Active Mem-bers
Patricia RobertsRetired Appointed by Mayor
Dorothy L. BryantPhlebotomistCity of Baltimore Health DepartmentElected by Active Members
TRUSTEES
Helen HoltonRetiredAppointed by Mayor/Baltimore City Council
Rosemary H. AtkinsonRetiredHOPE VI Community BuilderElected by Retired Mem-bers
John Beasley DeloitteAppointed by Mayor/Baltimore City Council This Popular Annual Report (PAFR) is a sum-
mary presentation of the Employees Retirement
System of the City of Baltimore’s audited finan-
cial statements and other information contained
in the Comprehensive Annual Financial Report
(ACFR). The PAFR provides an overview of the
System’s financial and operating results. The
complete audited financial statements and
pertinent notes to the financial statements can
be found in the 2021 ACFR.
+1 443-984-3200
+1 877-273-7136
contacters@bcers.org
www.bcers.org @bmoreretirement
Government Finance Officers Association
Award for Outstanding Achievement in Popular Annual Financial Reporting
Presented to the
Elected Officials Retirement System, City of Baltimore
Maryland
For its Annual Financial Report
for the Fiscal Year Ended 2020
Executive Director/CEO
CITY OF BALTIMOREEmployees’ Retirement Systems7 East Redwood Street, 11th, 12th &13th FloorBaltimore, MD 21202
Henry RaymondChair of the Board City of Baltimore Fianance DirectorEx-officio Member
Bill Henry ComptrollerEx-officio Member
Deborah F. Moore-Carter City of Baltimore Labor CommissionerElected by Active Members
Patricia RobertsRetired Appointed by Mayor
Dorothy L. Bryant PhlebotomistCity of Baltimore Health Department Elected by Active Members
TRUSTEES
Helen HoltonRetiredAppointed by Mayor/Baltimore City Council
Rosemary H. Atkinson RetiredHOPE VI Community BuilderElected by Retired Members
John Beasley DeloitteAppointed by Mayor/Baltimore City Council
Government Finance Officers Association
Award for Outstanding Achievement in Popular Annual Financial Reporting
Presented to the
Employees Retirement System, City of Baltimore
Maryland
For its Annual Financial Report for the Fiscal Year Ended 2020
Executive Director/CEO
This Popular Annual Report (PAFR) is a summary
presentation of the Employees Retirement System
of the City of Baltimore’s audited financial state-
ments and other information contained in the
Comprehensive Annual Financial Report (ACFR).
The PAFR provides an overview of the System’s
financial and operating results. The complete au-
dited financial statements and pertinent notes to
the financial statements can be found in the 2021
ACFR.
+1 443-984-3200
+1 877-273-7136
contacters@bcers.org
www.bcers.org @bmoreretirement