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Home My WebLink AboutCity of Fresno Employees Retirement System - Public Financial ReportCITY OF FRESNO EMPLOYEES RETIREMENT SYSTEM A MESSAGE TO MEMBERS This Popular Annual Financial Report (PAFR) summarizes the information contained in the Annual Comprehensive Financial Report (ACFR) that provides financial information on the City of Fresno Employees Retirement System's (the System) activities. This PAFR is presented in conformity with generally accepted accounting principles (GAAP). The more detailed ACFR is available on the System's website at www.cfrs-ca.org or by clicking here. RETIREMENT BOARD Phillip Hardcastle, Chair TJ Miller, Vice Chair Marvell French David Cain Alma Torres TABLE OF CONTENTS GFOA Award ...........................................................................1 Membership and Funded Status .............................................2 Total Net Position ....................................................................3 Fund Revenues .......................................................................4 Fund Expenses .......................................................................5 Investment Results, Actual and Target Allocations .................6 2828 Fresno Street, Suite 201 Fresno, CA 93721 p. (559) 621-7080 f. (559) 621-7081 www.cfrs-ca.org Popular Annual Financial Report For Fiscal Years Ended June 30, 2021, and 2020 1 Membership and Funded Status Membership Highlights Total overall membership in the System increased by 1.80% to 4,690. The total number of active members increased by 1.09% to 2,313. Retired membership increased 2.55% to 2,129. Inactive Vested membership increased 2.06% to 248. Fi sc a l Y e a r E n d i n g J u n e 3 0 Total Members Membership History 4,246 4,393 4,513 4,607 4,690 Active Members Retirees and Beneficiaries Inactive Vested Members 2017 2018 2019 2020 2021 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Funded Status The System’s funding objective is to meet long-term benefit obligations through contributions and investment income. As of June 30, 2021, the date of the last actuarial valuation, the funded ratio for the System was 116.0 percent reflecting that the System has a valuation value of assets which is in excess of the actuarial accrued liability. In general, this indicates that for every dollar of benefits due, we have approximately $1.16 of assets available for payment as of that date. As of June 30, 2020, the date of the previous annual actuarial valuation, the funded ratio for the System was 109.9 percent; and as of June 30, 2019, the funded ratio for the System was 111.9 percent. Fiscal Year Ending June 30 Fu nd e d S t a t u s Historical Funded Status 113.0%114.8% 111.9%109.9% 116.0% 2017 2018 2019 2020 202195% 100% 105% 110% 115% 120% Popular Annual Financial Report For Fiscal Years Ended June 30, 2021, and 2020 2 Total Net Position Fiscal Year Ending June 30 $ (M i l l i o n s ) History of Total Net Position (In Millions) $1,274 $1,349 $1,379 $1,361 $1,731 2017 2018 2019 2020 20210 250 500 750 1,000 1,250 1,500 1,750 At June 30, 2021, the City of Fresno Employees Retirement System had total assets of $1.847 billion, less total liabilities of $116 million, for a total net position restricted for pension benefits of $1.731 billion compared to $1.361 billion at June 30, 2020. “Net Position Restricted for Pension Benefits” represents funds available to pay benefits. It is a point in time or a snapshot of account balances as of the fiscal year- end (i.e., June 30). It indicates the assets available for future payments to retirees and any current liabilities. Increases and decreases in Net Position Restricted for Pension Benefits, when analyzed over time, may serve as an indicator of whether the System’s financial position is improving or deteriorating. Other factors, such as market conditions, should also be considered in measuring the System’s overall health. FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Current and Other Assets $ 106,641,832 $ 91,723,622 $ 123,581,049 $ 61,314,319 $ 134,361,039 Investments at Fair Value 1,275,434,469 1,346,977,080 1,351,121,470 1,359,346,092 1,712,954,301 Total Assets $ 1,382,076,301 $ 1,438,700,702 $ 1,474,702,519 $ 1,420,660,411 $ 1,847,315,340 Total Liabilities 107,954,565 90,010,069 95,287,389 59,823,508 116,077,927 Net Position Restricted for Pension Benefits $ 1,274,121,736 $ 1,348,690,633 $ 1,379,415,130 $ 1,360,836,903 $ 1,731,237,413 Popular Annual Financial Report For Fiscal Years Ended June 30, 2021, and 2020 3 Fund Revenues Fund revenues for the fiscal year 2021 increased $394,014,761 or 826.20 percent over the prior year from $47,690,169 to $441,704,930, which includes employee contributions of $13,749,909, employer contributions of $20,144,322, a net investment income gain of $407,614,716 and net securities lending income of $195,983. The current year increase in fund revenues is primarily due to a strong performance in the global investment markets. Schedule and Graph of Fund Revenues By Source For Fiscal Years Ended June 30, 2017 to 2021 2017 2018 2019 2020 2021 Employer Contributions $ 15,205,360 $ 14,608,659 $ 14,627,425 $ 16,553,928 $ 20,144,322 Employee Contributions 10,180,589 10,329,475 10,515,533 11,027,519 13,749,909 Investment Income 162,376,205 108,915,466 69,388,982 20,108,722 407,810,699 TOTAL $ 187,762,154 $ 133,853,600 $ 94,531,940 $ 47,690,169 $ 441,704,930 Fiscal Year Ending June 30 Employer Contributions Employee Contributions Investment Income 2017 2018 2019 2020 2021 $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 $450,000,000 Popular Annual Financial Report For Fiscal Years Ended June 30, 2021, and 2020 4 Fund Expenses Fund Expenses for the fiscal year 2021 increased $5,036,024 or 7.60 percent over the prior fiscal year from $66,268,396 to $71,304,420, which includes benefit payments of $67,497,485, refunds of contributions of $1,748,572 and administrative expenses of $2,058,363. The current year increase in expenses is due primarily to the increases in retirees and the respective retirement benefits paid in 2021 even though there were no Post Retirement Supplemental Benefits (PRSB) paid during calendar year 2021. Schedule and Graph of Fund Expenditures By Type For Fiscal Years Ended June 30, 2017 to 2021 2017 2018 2019 2020 2021 Benefit Payments $ 54,350,851 $ 56,241,911 $ 60,814,434 $ 63,591,967 $ 67,497,485 PRSB — — — — — Refunds of Contributions 1,199,054 1,424,025 1,329,651 927,501 1,748,572 Administrative Expenses 1,389,532 1,618,767 1,663,358 1,748,928 2,058,363 TOTAL $ 56,939,437 $ 59,284,703 $ 63,807,443 $ 66,268,396 $ 71,304,420 Fiscal Year Ending June 30 Benefit Payments Post Retirement Supplemental Benefit (PRSB) Refunds of Contributions Administrative Expenses 2017 2018 2019 2020 2021 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 Popular Annual Financial Report For Fiscal Years Ended June 30, 2021, and 2020 5 Investment Results, Actual and Target Allocations The System generated a total investment gain of 30.81 percent, gross of fees, as reported by the System's custodian, Northern Trust, for the fiscal year ended June 30, 2021. The fiscal year return was 23.81 percent more than the System's actuarial interest rate assumption of 7.00 percent, while outperforming its policy- weighted benchmark of 27.22 percent by 3.59 percent, and also outperforming its actual weighted benchmark of 29.15 percent by 1.66 percent. The System’s ten-year annualized returns averaged 9.33 percent, outperforming its policy benchmarks return of 8.62 percent for the period by 0.71 percent. The System remains highly funded and well positioned to serve our members and retirees. As illustrated by the System’s 10, 15 and 25-year long-term gross of fees returns of 9.33 percent, 7.76 percent and 8.37 percent, respectively, as of June 30, 2021, the System has the ability to achieve its long-term objectives over extended periods. After paying all benefits and expenses of the System, the year-end value of the System reached $1.731 billion. Additional information regarding the framework for investing System's assets can be found in the Investment Policy Statement, which is available on System's website at www.cfrs-ca.org or by clicking here. Highlighted below is the Investment Performance of the System’s Investment Portfolio gross of fees provided by its custodian for Fiscal Year 2021: FY 2021 Domestic Equity 46.89% International Equity 38.24% Fixed Income 7.57% Real Estate 9.83% Alternatives 27.94% Total Fund 30.81% Fiscal Year Ending June 30 Pe rc e n t a g e % City of Fresno Retirement Systems Fiscal Year Total Fund and Policy Benchmark Returns 14.74% 8.87% 5.6% 1.62% 30.81% 13.74% 8.34%5.86% 0.66% 27.22% Fresno Total Fund (Gross of Fees)Policy Benchmark 2017 2018 2019 2020 2021 -5% 0% 5% 10% 15% 20% 25% 30% 35% Popular Annual Financial Report For Fiscal Years Ended June 30, 2021, and 2020 6 Investment Results, Actual and Target Allocations Continued Target and Actual Asset Allocation As of June 30, 2021 Asset Class FY 2021 Allocation Range Domestic Equities Large-Cap 21.3%10.0% - 26.0% Small-Cap 8.4%2.0% - 12.0% International Equities Developed Markets 18.7%14.0% - 24.0% Emerging Markets 10.1%3.0% - 9.0% Fixed Income Core Fixed Income 8.9%7.0% - 15.0% High Yield Bonds 4.9%4.0% - 12.0% Real Estate Core Real Estate 8.2%7.0% - 15.0% Value Add Real Estate/REITs 3.4%2.0% - 6.0% Alternatives Infrastructure 3.5%2.0% - 6.0% Midstream Energy (MLP's)5.0%2.0% - 8.0% Private Equity 2.4%0.0% - 10.0% Private Debt 5.2%4.0% - 12.0% Short-Term Investments 0.0%0.0% 100% Actual Asset Allocation As of June 30, 2021 Domestic Large Cap Equities: 21.3% Domestic Small Cap Equities: 8.4% International Developed Market Equities: 18.7% International Emerging Market Equities: 10.1% Core Fixed Income: 8.9% High Yield Bonds: 4.9% Core Real Estate: 8.2% Value Add Real Estate/REITs: 3.4% Infrastructure: 3.5% MLPs: 5.0%Private Equity: 2.4% Private Debt: 5.2% Popular Annual Financial Report For Fiscal Years Ended June 30, 2021, and 2020 7