2023 Popular Annual Financial Report

Leading the Way Efficiency and Prudence through Technology Integration

Popular Annual F I N A N C I A L RE PO RT FO R M E M B E R S

A Pension Trust Fund and Component Unit Serving the County of Contra Costa California and Participating Employers CONCORD, CALIFORNIA

POPULAR ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2023

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A Message to Our Members Chief Executive Officer

Christina Dunn Dear Members, As your new Chief Executive Officer, along with the CCCERA team, I am honored to present the Popular Annual Financial Report (PAFR) for the Year Ended December 31, 2023. The financial data presented in the PAFR is derived from the Annual Comprehensive Financial Report (ACFR) which is audited and presents a detailed overview of CCCERA’s financial, investment, and actuarial-related results for the year. The goal is to provide a summary of CCCERA’s ACFR that allows members and other interested parties to review the fund’s fiscal information, demographics, and service accomplishments.

CCCERA’s investment portfolio returned 9.0% (net of investment management fees) for the year ending December 31, 2023. This return was lower than the policy index return, which was 9.9% for 2023, reflecting market conditions throughout the year.

As of December 31, 2023, CCCERA’s net fiduciary position, or plan assets, totaled $10.8 billion which is the result of $11.3 billion in assets exceeding $0.5 billion in liabilities. The primary use of plan assets include benefit payments to retirees and their beneficiaries, contribution refunds to terminating employees, and costs for administering the system. The funded ratio is 91.2% per the latest actuarial valuation report as of December 31, 2022.

CCCERA has a net pension liability of $1.60 billion as of December 31, 2023.

As of the same date, the plan assets as a percentage to the total pension liability is 87.1% and the net pension liability as a percentage of covered payroll is 145.8%. The associated schedules and further additional information for this requirement are shown in the Financial Section of the ACFR. This PAFR report is not intended to replace the ACFR. Detailed information on the subjects included here and other important aspects of CCCERA’s administration are located in our ACFR at cccera.org/2023-annual-comprehensive-financial-report.

Christina Dunn Chief Executive Officer

2

Contra Costa County Employees’ Retirement Association

CCCERA’s Core Values

Trust Trust and Integrity are the foundation of CCCERA. We will treat all with fairness, dignity, and respect.

Innovation Enhanced and streamlined processes are beneficial for the plan and its stakeholders.

CCCERA will engage in continuous improvement to increase efficiencies and effectiveness.

Accountability Responsibility and reliability are essential. CCCERA will facilitate a professional environment that fosters ownership of work product and services provided to stakeholders.

CCCERA’s mission is to effectively and accurately administer pension benefits earned by our members and to be prudent stewards of plan assets.

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Major Initiatives and Accomplishments Pension Administration Project CCCERA strives to provide excellent customer service, operate the pension plan in an efficient and cost-effective manner, and to maintain member data safely and accurately. To accomplish these principles, a contract was awarded in 2021 for the design and development of a new pension administration system. Over the last two years, design sessions followed by thorough testing have been conducted by staff to build and create the system to provide the excellent customer service CCCERA strives for.

Investment Portfolio Management As an integral part of the investment policy, CCCERA has an internally developed portfolio construction methodology, known as the Functionally Focused Portfolio, to assign portfolio allocations according to strategic priorities as defined by our Board. The Functionally Focused Portfolio consists of three sub-portfolios; Liquidity, Growth, and Risk Diversifying.

Streamlined Retirement Application and Calculation Process CCCERA redesigned this process to reduce the time that new retirees wait to receive their first benefit payment. CCCERA committed to retirees who submit completed retirement applications, that their first benefit payment would be no more than 75 days after their last employer paycheck. In 2023, the average processing time was reduced even more to approximately 55 days.

CCCERA continues to fulfill its mission to administer pension benefits earned by our members and to be prudent stewards of plan assets including effective monitoring of the investment portfolio performance. Please refer to the ACFR Investment Section for additional information.

Awards for Excellence in Financial Reporting For the 14th consecutive year, the Government Finance Officers Association (GFOA) of the United States and Canada presented an award to CCCERA for Outstanding Achievement in Popular Annual Financial Reporting in recognition of its PAFR for the fiscal year ended December 31, 2022. CCCERA also earned the Public Pension Coordinating Council’s Public Standard Award for 2023 which further recognizes CCCERA’s conformance with the highest standards for preparation of state and local government reports.

2023 Service Accomplishments Approximately

7,000

payees located in Contra Costa County and nearby communities were paid almost

$26 million

each month through member earned benefit payments.

CCCERA processed monthly retirement payrolls equaling approximately

$53 million 11,000 to

Public Pensio

ce Government Finan

iation Officers Assoc

Award for Outstanding Achievement in Popular Annual ng Financial Reporti Presented to

County Contra Costa tion irement Associa Employees' Ret California t Financial Repor For its Annual Year Ended For the Fiscal

PP C C

n Coordinating

Council Public Pens ion For Funding Standards Award and Adminis tration 2023 Presented to

Contra Co sta County Employees' Retirement Associatio n In recognitio

payees throughout the world.

n of meeting professional plan funding standards for set forth in the and administration as Public Pension Standards.

Presented by the Publ

ic Pension Coor dinating Coun cil, a confederat National Asso ion of National Conf ciation of State Retiremen erence on Publi t Administr National Coun c Employee Retiremen ators (NASRA) t Syste cil on Teacher Retirement (NCT ms (NCPERS) R)

2022 December 31, Alan H. Winkle Program Admini strator

or/CEO Executive Direct

2023 Popular Annual Financial Report

3

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Fiduciary Net Position Restricted for Benefits

2022, primarily due to positive investment returns.

CCCERA’s total investment portfolio returned 9.0% net of fees for the fiscal year ending December 31, 2023, lower than the policy index return which was 9.9% for 2023. CCCERA’s net of fees annualized rate of return was 3.5% over the last three years, 6.8% over the last five years, and 6.1% over the last 10 years.

As of December 31, 2023, CCCERA had $10.8 billion in net position restricted for benefits, which means that assets of $11.3 billion exceeded liabilities and deferred inflows of resources of $0.5 billion.

The Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position report CCCERA’s net position restricted for benefits and is one way to measure the plan’s financial position. Over time, increases and decreases in CCCERA’s net position are indicators of whether its financial position is improving or deteriorating. Other factors, such as market conditions, should be considered in measuring CCCERA’s overall financial position.

Pension Plan Fiduciary Net Position Restricted for Benefits As of December 31, 2023, and 2022 (Dollars in Thousands) Amount Percent Increase/ Increase/ (Decrease) (Decrease)

2023

2022

Current and Other Assets

$779,987

$785,559

$(5,572)

Investments at Fair Value

Assets (0.7%)

10,519,893

9,774,736

745,157

7.6%

Capital Assets

5,195

4,258

937

22.0%

Total Assets

11,305,075

10,564,553

740,522

7.0%

Current Liabilities

495,027

509,794

(14,767)

(2.9%)

Total Liabilities

495,027

509,794

(14,767)

(2.9%)

1,190

1,090

100

9.2%

$10,808,858

$10,053,669

$755,189

7.5%

Liabilities

As of December 31, 2023, the net position restricted for benefits increased by 7.5% compared to

Deferred Inflows of Resources—OPEB Net Position— Restricted for Benefits

Pension Plan Fiduciary Net Position Over 10 Years (Dollars in Millions) $12,000

$10,000

$8,000

$6,000 $6,909

$6,977

$7,439

$8,391

$8,150

$9,257

$10,070

$11,454

$10,054

$10,809

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

$4,000

$2,000

$0

4

Contra Costa County Employees’ Retirement Association

Efficiency and Prudence through Technology Integration

Changes in Fiduciary Net Position The primary sources of funding for CCCERA member benefits are employer contributions, plan member contributions, and net investment income. Total additions to fiduciary net position for the years ended December 31, 2023 and 2022, were $1,389.0 million and $(797.2) million, respectively. The increase in the current year is primarily due to positive investment gains earned compared to previous year. Plan member contributions increases over the prior year were mostly due to an increase in plan member rates. Net investment income for the year ended December 31, 2023 totaled $882.6 million.

CCCERA’s plan assets can only be used to make benefit payments to retirees and beneficiaries, contribution refunds to terminated employees, and pay the cost of administering the system. Total deductions from fiduciary net position for the years ended December 31, 2023 and 2022, were $633.8 million and $602.9 million, respectively. The majority of the increase in deductions is attributed to benefits paid to retirees and beneficiaries which were $594.5 million in 2023, an increase of $30.6 million, or 5.4% over 2022.

The growth in benefit payments was due to a combination of the following: (1) the net increase in the number of retirees and beneficiaries for the year, and (2) the increase in average retirement allowances of those added to the retirement payroll.

Pension Plan Changes in Fiduciary Net Position Restricted for Benefits

Amount Percent Increase/ Increase/ (Decrease) (Decrease)

2023

2022

Employer Contributions

$373,148

$352,384

$20,764

5.9%

Plan Member Contributions

132,104

122,304

9,800

8.0%

Net Investment Income (Loss)

882,547

(1,272,930)

2,155,477

169.3%

Net Securities Lending Income

1,169

1,054

115

10.9%

1,388,968

(797,188)

2,186,156

274.2%

594,474

563,881

30,593

5.4%

Additions

Deductions Pension Benefits Contribution Prepayment Discount

15,466

10,032

5,434

54.2%

Administrative

12,840

11,538

1,302

11.3%

Refunds

10,063

13,738

(3,675)

(26.8%)

Other Expenses

936

3,720

(2,784)

(74.8%)

Total Deductions

633,779

602,909

30,870

5.1%

$755,189 $(1,400,097)

$2,155,286

153.9%

Increase (Decrease) in Net Position

20,000 3,200 5,500 75,000

phone calls, almost

email inquiries, sent over

member letters, and distributed almost

newsletters during the year.

As of December 31, 2023, and 2022 (Dollars in Thousands)

Total Additions

CCCERA responded to over

16 500

Conducted member presentations with over

attendees educating members on CCCERA pension benefits including the retirement application process, enrolling in CCCERA, completing retirement service pwrchases, and establishing reciprocal benefits.

2023 Popular Annual Financial Report

5

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Asset Allocation and Investment Results

Actuarial Funding Status

Asset allocation is an integral part of CCCERA’s investment policy. CCCERA’s Chief Investment Officer and the outside investment consultants (Verus and Stepstone) assist the Board of Retirement in designing strategic diversification strategies to maintain steady, long-term gains, with appropriate risk. Please refer to the ACFR for additional information.

In order to determine whether the pension plan’s net position restricted for benefits will be sufficient to meet future obligations, the actuarial funding status needs to be calculated. An actuarial valuation is similar to an inventory process. On the valuation date, the assets available for the payment of retirement benefits are appraised, with gains and losses over the previous five years smoothed to avoid significant swings in the value of assets from one year to the next. These assets are compared to the actuarial accrued liabilities, which are the actuarial present value of future benefits (attributable to service already earned) expected to be paid for each member.

Domestic Equity 18.8%

Global & International Equity 23.8%

High Yield 1.4%

Private Equity 12.0%

Liquidity 14.8%

The purpose of the valuation is to determine what future contributions by the members and by the employers are needed to pay all expected future benefits.

Private Credit 9.9%

Cash & Overlay 2.4%

Real Estate – Value Add 2.1% Risk Parity 3.1% Real Estate – Real Estate – REIT 1.9% Opportunistic & Distressed 3.0%

Risk Diversifying 6.8%

Funded Ratio Unfunded Actuarial Accrued Liability

-

Total Domestic Equity

21.4%

6.0%

12.8%

10.0%

Total Global Equity

18.2%

2.5%

11.4%

8.1%

Total International Equity

15.1%

0.3%

7.5%

4.2%

Total High Yield

12.0%

1.5%

4.7%

3.6%

Private Equity

−1.0%

16.5%

13.3%

12.4%

Private Credit

9.1%

9.9%

8.2%

9.1%

Total Real Estate

−10.2%

0.4%

0.6%

5.6%

Risk Parity

4.7%

-3.6%

2.90

-

Diversifying

2.2%

-0.7%

0.6%

0.4%

Total Cash

2.5%

1.7%

1.9%

1.0%

Total Fund

9.0%

3.5%

6.8%

6.1%

Total Fund excl.

Overlay & Cash

9.0%

3.8%

7.0%

6.2%

* Using time-weighted rate of return based on the market rate of return.

6

Contra Costa County Employees’ Retirement Association

81

$6.0

^

^ .5% 84

^ .4% 76

$4.0

$2.0

$0.0 2022

1.9%

88

.5%

^

2021

0.5%

.7%

^

.4%

.6%

2020

5.4%

86

^

^ 92

90

2019

Liquidity

.5%

$8.0

2018

10 Year

.3% ^

89

2017

5 Year

91

2016

Current Year 3 Year

.8% ^

$10.0

2015

Annualized (Net of Fees)

.2% ^

91

2014

As of December 31, 2023

$12.0

2013

Investment Results Based on Fair Value*

Valuation Value of Assets

Actuarial Accrued Liability (Dollars in Billions)

The main investment goal is for the total return to exceed the policy index return, which was 9.9% for 2023.

As mentioned, for the year ended December 31, 2023, the total return was 9.0% after fees.

Funded Ratio is a measurement of the funded status of the plan. The Funded Ratio is calculated by dividing the Valuation Assets by the Actuarial Accrued Liability.

Efficiency and Prudence through Technology Integration

Revenue By Source Continued with regular updates and latest news and information for our members and employers through our website and social media.

Public pension systems like CCCERA have three main funding sources: employee contributions, employer contributions, and investment returns. It is a common misperception that employers pay the bulk of pension expenses. In fact, the largest funding source consistently is investment returns.

new videos

CCCERA’s actuarial valuations are performed annually as of December 31 each year. Contribution requirements and rates resulting from such valuations become effective 18 months after the valuation date. For example, the valuation as of December 31, 2022 and resulting rates become effective on July 1, 2023.

11%

Created

Employee Contribution

including:

What’s in your pension dollar?

When to Retire

(Average over the last ten years.)

53%

Terminating Your Membership, Reciprocity

36%

Investment Earnings

A Guide To Filling Out Enrollment Forms

Employer Contribution

Average Benefit Payments

Membership

The chart below is a broad representation of average benefits paid monthly over 10 years to retirees and beneficiaries. Both general and safety member figures are combined in this calculation, as are all tiers. The chart includes all members who have retired through December 31, 2022.

CCCERA’s membership consists of full and part-time employees, members who have left employment service and have deferred their receipt of retirement benefits, and retirees and their beneficiaries from the County of Contra Costa and participating employers and districts. CCCERA’s total membership as of December 31, 2023 is 25,294.

99 $4 ,43

3

$5,000

0 $4 ,08 6 $4 ,15

3 $4 ,2

$4,500 73 $3 ,63 6 $3 ,67 4 $3 ,77 1 $3 ,86 3 $3 ,94

5,000 2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

Active

9,547

9,737

10,278

10,563

10,834

3,477

3,638

3,812

3,990

4,111

10,021

10,075

10,005

10,082

10,349

2019

2020

2021

2022

2023

20,000

10,000

$3,500

Deferred

25,000

15,000

$3 ,5

$4,000

Retired

0

2023 Popular Annual Financial Report

7

Presorted Standard U.S. Postage

PAID

OAKLAND, CA Permit No. 3729

1200 Concord Avenue, Suite 300, Concord, CA 94520 Phone: (925)521-3960 Fax: (925)521-3969 cccera.org

Popular Annual F I N A N C I A L R E P O RT FO R M E M B E R S FOR THE YEAR ENDED DECEMBER 31, 2023

2023 Board of Retirement (As of December 31, 2023)

Scott W. Gordon Chairperson David J. MacDonald Vice-Chairperson Jerry R. Holcombe Secretary Russell Watts County Treasurer John B. Phillips Candace Andersen Samson Wong Louie Kroll Dennis Chebotarev Mike Sloan (Retiree Alternate)

CCCERA Participating Employers • County of Contra Costa

• Contra Costa Fire Protection District

• Bethel Island Municipal Improvement District

• Contra Costa Mosquito and Vector Control District

• Byron-BrentwoodKnightsen Union Cemetery • Central Contra Costa Sanitary District • Contra Costa County Employees’ Retirement Association

• First 5 – Contra Costa Children & Families Commission • Housing Authority of the County of Contra Costa • In-Home Supportive Services Public Authority (IHSS)

• Local Agency Formation Commission (LAFCO) • Moraga-Orinda Fire Protection District • Rodeo-Hercules Fire Protection District • Rodeo Sanitary District • San Ramon Valley Fire Protection District • Superior Court of California, County of Contra Costa

More About CCCERA

Jay Kwon (Appointed Alternate) Donnie Finley (Safety Alternate)

CCCERA’s website, cccera.org, provides resources for members, employers and the public. In addition to the ACFR, it features forms, handbooks, video tutorials, a calculator to estimate retirement benefits, and more.