MWRD Board Receives Positive Report On Retirement Fund

Metropolitan Water Reclamation District (MWRD) Board Meeting
July 14, 2022

James Mohler, President of the MWRD Retirement Fund, had good news for the MWRD Board on the status of the Retirement Fund at the end of 2021:

• Both the actuarial and market value of the assets achieved record highs.
• The actuarial funding ratio continued to improve to 58.7%, up from 57.3% in 2020 and 50.4% ten years ago.
• The net pension liability dropped by $224 M over the last 3 years.
• The Fund’s annual net rate of return has exceeded the Actuarial Assumed Rate of Return over the last 3 years, and has a cumulative 3-year return of 14.2%.
• Of particular importance to Mr. Mohler, the Investment Expense Ratio dropped by 10 points, saving approximately $1.6 M in yearly expenses.
• Mr. Mohler also noted that the Fund is above the MWBE utilization targets.

Nevertheless, Mr. Mohler stated that there are future challenges that include

• Growing annual operating cash flow deficits, projected to be close to 7% of Fund Reserves in 5 years.
• Continued elevated numbers of retirements which result in cash going out vs. lower numbers of new employees being hired who pay into the Fund.
• Future market corrections (such as what is being experienced now) can reduce the Reserves.

Mr. Mohler praised the Board for its additional contributions over what the Actuarial Determined Contribution over the past several years.  Those additional contributions have been rewarding.  (Agenda Item 42, No. 22-0630)

Board Action:

• All items on the Consent Agenda were passed with one exception.
• Commissioner Corral Sepulveda deferred Agenda Item 15 at the request of Commissioner Garcia, who was absent.   This item is an authorization to make payment to Current Innovation, NFP for the 2022 annual membership dues of up to $100,000.  (No. 22-0625)

Board Discussion:

• Commissioner Davis raised questions regarding Agenda Item 26, and continued the discussion regarding Item 35, as to how the MWRD staff determines when to reject a bid as being too high as compared to the contract estimate in this time of fast rising prices due to inflation and supply chain issues.  Item 26 was authority to issue purchase order to the low bidder for furnishing electric motors, pumps, drives, breakers and transformers at locations under Group B.  Such bid was 11% below the contract estimate.  Single bids received for Groups A and C were rejected as too high as they were 46% and 113% over the contract estimates, respectively.  No bid was received for Group D.   (No.22-0628)
• Director Perkovich said that in this case, one of the considerations by staff is that there was a single bidder for Groups A and C.  The overall consideration is whether staff thinks that by rebidding the contract (and possibly tweaking it to entice more bidders) future bids will come in lower than the bids being rejected.

New Business:

• Commissioner Perry asked that the Board do more to publicize PFAS (polyfluoralkyl substances found in chemicals which may pose health problems) and what the MWRD is doing about them.  President Steele asked her to take the lead on working with Public Affairs.  Director Perkovich said that these PFAS are a national project and that it makes more sense to deal with the source, rather than trying to remove them from water.
• Commissioner Davis thanked staff for unbundling a contract so that it can be rebid in multiple parts. He said such unbundling both provides a safety net if the price of the items goes up and increases the likelihood of MWBE participants.  
• Commissioner Davis also verified the dates for developing the Board’s legislative agenda for 2023.
• Commissioner Corral Sepulveda thanked the Board for the opportunity to represent it at a Water and Waste Management Conference in Thailand.  She said she is hoping to follow-up by having Thai officials come here, particularly the Education Minister so the MWRD can learn more about that Minister’s efforts to engage youth in water management issues.

Observer:  Priscilla Mims