SBCERS Annual

Review 2022
Santa Barbara County Employees Retirement System
June 28, 2022
Mission

The Santa Barbara County Employees’ Retirement

System is committed to fulfilling its fiduciary
responsibility by providing the highest quality of
service to all members and plan sponsors, and
protecting promised benefits through prudent
investing, while ensuring reasonable expenses of
administration.

2 Annual Review June 28, 2022

Board of Retirement
and Senior Staff
11 Member Board of Retirement (inc. two alternates)
• 6 elected by membership
• 4 appointed by County Board of Supervisors
• 1 County Treasurer Tax-Collector
Senior Leadership Team
• Member Services
• Investments
• Operations
• Legal
• Communications

3 Annual Review June 28, 2022

Operational Focus
on Innovation

Data driven decision making Dynamic Communication Team and Organization

 Member service surveys.  Establishing multiple vectors of  Significant investment in

 Employee engagement surveys.
 Rigorous analysis of investment
performance.
 In-depth evaluation of payroll
trends.
communication with membership.
organizational development.
 Using digital tools to leverage
lower cost member education and  Modern facilities.
reduce account administration
costs.  Leading on Diversity and
 Developing focused in-person Inclusion.
events and going out to the
member.

4 Annual Review June 28, 2022

Results
FY2021 Plan Results

Net Position FY 2021 Investment Return Funded Ratio

$3.99
25.2% 89.5%
Billion

6 Annual Review June 28, 2022

FY 2021
Unfunded Liability

Plan Liability $4.46 Billion

Less Net Position $3.99 Billion

= Unfunded Liability $470 Million

7 Annual Review June 28, 2022

Demographics
Active Deferred
• 4,321 Members • 1,694 Members
• $88,891 Average Pay • 45.9 Average Age

10,921 Total
Members and
Beneficiaries
Retired Beneficiaries
• 4,287 Members • 619 Beneficiaries
• 58.8 Average Age • $25,003 Average Benefit
• $44,953 Average Benefit

8 Annual Review June 28, 2022

 Trends

June 17,Review
Annual
9 2022
Net Investment
Performance

Trailing Returns as of
03/31/2022:
 8.42% Since Inception
 7.77% 10 Year
 7.99% 7 Year
 9.49% 5 Year
 10.79% 3 Year

10 Annual Review June 28, 2022

Relative
Performance

Highlights

 Upward Trend in 5 years Trailing

performance compared to
peers.
 Outperformed peers during
downside volatility events
 Policy drag driven by
implementation (imperfect
benchmarks).

11 Annual Review June 28, 2022

Relative Risk Adjusted
Performance

Highlights

 Top quartile risk adjusted

return suggests that we are
earning more per dollar of risk
taken than our peers.

12 Annual Review June 28, 2022

 Funded Ratio
5,000 100.00%
Millions

1,104 470
4,500 Lowered 90.00%
Discount
4,000 1,017 Rate to 7% 80.00%

3,500 70.00%

3,000 60.00%

2,500 50.00%

2,000 40.00%

1,500 30.00%

1,000 20.00%

500 10.00%

0 0.00%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Market Value of Assets Unfunded Actuarial Liability Funded Ratio
13 Annual Review June 28, 2022
 Historical Contribution
Rate Trend
45.00%
41.40%
36.55% 39.07%
40.00%

35.00%
PERCENTAGE OF COMPENSATION

30.00%
23.06% 23.30%
25.00%

20.00%

15.00%
9.30%
10.00%

5.00%
7.42%
0.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
VALUATION YEAR

Employee Rate Employee Rate without Cost-Sharing Employer Rate

14 Annual Review June 28, 2022
Covered Payroll
$450.00
Millions

$400.00

$350.00

$300.00

$250.00

$200.00

$150.00

$100.00

$50.00

$-
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Covered Payroll

15 Annual Review June 28, 2022

 Trends
Outlook

June 17,Review
Annual
16 2022
 Contribution
Projections
50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
Employer Contribution Difference from Prior Year Projection

17 Annual Review June 28, 2022

 Amortization layers and
projected payment
250
Millions

200

150

100

50

-50

-100

-150
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Safety Plan 6 Layer 2013 UAL 2014 GL 2015 GL 2016 GL
2016 Assump 2017 GL 2017 Assump 2018 GL 2019 GL
2019 Assump 2020 GL 2020 Assump 2021 GL Total UAL Payment
18 Annual Review June 17, 2022
June 30, 2022 Return-To-Date

Market Climate in June

 Portfolio closed May positive 3.58% on
fiscal year.
 Market volatility has persisted through
middle of June (as of this writing).
 Negative 4.18% is the month-to-date
performance for a 60/40 stock and bond
portfolio as of June 16, 2022.
 The following slide illustrates impact of a
0% return year on amortization costs (this
happened in 2020) under current
assumptions.

19 Annual Review June 28, 2022

 Amortization layers and
projected payment
250
Millions

200
$29.35
150 Million

100

50

-50

-100

-150
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Safety Plan 6 Layer 2013 UAL 2014 GL 2015 GL 2016 GL
2016 Assump 2017 GL 2017 Assump 2018 GL 2019 GL
2019 Assump 2020 GL 2020 Assump 2021 GL Total UAL Payment
20 Annual Review June 28, 2022
 Funded Ratio and Return Assumptions
of California County Systems
120.00%

110.00%

100.00%
Funded Ratio

90.00%

80.00%

70.00%

60.00%

50.00%
6.00% 6.25% 6.50% 6.75% 7.00% 7.25% 7.50%
Discount Rate SBCERS
21 Annual Review June 28, 2022
 Triennial Assumption
Setting Process
April/May
Goals
June/July
Capital Market • Stable
Assumptions August / September / October
Asset Liability Contribution
Analysis
Review of
November / December Rates
Asset Allocation
Review and Demographic
determination Assumptions Auditing Results
Setting Economic Finalizing Plan • Long-term
Assumptions Assumptions and
setting contribution Sustainability
rates

22 Annual Review June 28, 2022

Thank you