TRANSMITTAL LETTER FOR BOARD MEETING OF NOVEMBER 7, 2024
COMMITTEE ON PENSION, HUMAN RESOURCES AND CIVIL SERVICE
Mr. Brian A. Perkovich, Executive Director
Title
Annual Report for the Deferred Compensation Plan and Trust for 2023
Body
Dear Sir:
The Board of Commissioners adopted the Deferred Compensation Plan and Trust (Plan) effective September 1, 1998. The Plan document has been revised and restated several times since 1998 with the most recent revision adopted June 4, 2015. As stated in the Plan document, the Plan was established and shall be maintained for the exclusive benefit of participants and their beneficiaries.
The District, through its Board of Commissioners, serves as Trustee and fiduciary for the Plan. The Board of Commissioners has established a Deferred Compensation Committee (Committee) in accordance with the Plan document. The Committee consists of the Chairman of the Committee on Finance, Marcelino Garcia; the Treasurer, Steve Lux; and the Director of Human Resources, Thaddeus J. Kosowski. The Committee is the primary fiduciary of the Plan, with authority to interpret and oversee the administration of the Plan. This responsibility includes the recommendation of a plan administrator and investment advisor for the Plan and ongoing oversight of these providers to ensure the Plan is administered in accordance with the Plan document and the Investment Policy.
Recordkeeping and administrative services for the District plan are currently provided by Variable Annuity Life Insurance Company (operating under the brand name Corebridge Financial). The District also contracts with Innovest Portfolio Solutions, LLC to provide deferred compensation investment consulting services as required by the Investment Policy.
Baker Tilly US LLP, independent auditor, examined the basic financial statements of the Metropolitan Water Reclamation District Deferred Compensation Plan. The examination was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Their audit included the following: examination, on a test basis, of evidence supporting the amounts and disclosures in the financial statements; assessment of the accounting principles used and significant estimates made by management; evaluation of the overall financial statement presentation; and other auditing procedures, as were considered necessary. The Auditor issued an unmodified opinion.
The Plan document requires that the Committee shall submit an annual report to the Board of Commissioners to provide an assessment of the financial health of the Plan. The Plan investment balance as of December 31, 2023 was $353,592,544. This represents a net increase of $41,859,137 from December 31, 2022. The Plan had a net outflow (contributions versus distributions) of $5,430,938 for the year. Plan fees were $217,245, with $119,929 attributed to the voluntary investment advisory program. Plan investment gains were $48,039,502 or 15.4%.
The table below shows a comparison of total assets over the prior three-year period:
December 31, 2021 December 31, 2022 December 31, 2023
Mutual Funds $278,337,206 $227,682,791 $273,961,934
Stable Value Funds $81,962,863 $80,990,526 $75,532,429
Self-directed Accounts $3,787,258 $3,060,090 $4,098,181
Total Assets $364,087,327 $311,733,407 $353,592,544
There were 2,058 participants, including active employees and retirees, enrolled in the Plan as of December 31, 2023 compared to 2,028 at the close of 2022. As of December 31, 2023, the average account balance was $171,814 up from $153,715 as of December 31, 2022.
As provided in the Trust document, the annual report includes as an attachment, Exhibit 1: (a) the basic financial statements of the Plan as of December 31, 2023; and (b) a statement of investments including changes in assets available for distribution in 2023.
The Deferred Compensation Committee is pleased to submit this report to the Board of Commissioners.
Respectfully Submitted, Marcelino Garcia, Chairman Deferred Compensation Committee; Steve Lux, Treasurer; Thaddeus J. Kosowski, Director of Human Resources
Attachments