DRAFT FOR REVIEW Colorado Public Employees Retirement Association Board Meeting Minutes

Transcription

1 DRAFT FOR REVIEW Colorado Public Employees Retirement Association Board Meeting Minutes Garden of the Gods Resort 3320 Mesa Road Colorado Springs, Colorado September 22, :00 a.m. Trustees Present: Timothy M. O Brien, Chairman, Marcus Pennell, Vice Chairman, Will Bain, Guillermo Barriga, Julie Friedemann, Amy Grant, David Hall, Roger Johnson, Suzanne Kubec, Carolyn Jonas-Morrison, Robert Lamb, Tina Mueh, Susan Murphy, Bill Parker, Ryan Parsell, Walker Stapleton, Lynn Turner Staff Present: Ron Baker, Donna Baros, Adam Franklin, Katie Kaufmanis, Jim Liptak, David Mather, Tara May, Amy McGarrity, Brenda Meidl, Lawrence Mundy, Karl Paulson, Gregory W. Smith Timothy M. O Brien, Chairman, called the meeting to order at 8:02 a.m. Approval of Consent Agenda A motion was made by Lynn Turner and seconded by Roger Johnson that, the Board approve the Consent Agenda as published with the following items: a. Approval of Agenda b. Approval of June 23, 2017, Board Meeting Minutes (Tab A) c. Sudan Scrutinized Companies List (Tab B) d. Divestment From Companies With Prohibitions Against Israel Restricted Company List (Tab C) e. Governance Manual Monitoring and Reporting Policy (Tab D) f. Signature Authorization (Tab E). The motion was approved. Public Comment There was no public comment. Committee Assignments A motion was made by Marcus Pennell and seconded by Julie Friedemann that, the Board approve the Committee Assignments as transmitted to Trustees as Tab F. The motion was approved. Proclamation Carole Wright Marcus Pennell read the following Proclamation concerning former Trustee Carole Wright:

2 Page 2 of 6 Whereas, Carole Wright first served as a Trustee on the Board of the Colorado Public Employees Retirement Association (PERA) filling a vacancy in the School Division in 1993 and was elected in 1994, re-elected in 1996, and served until her retirement in 2000; and Whereas, Carole was then elected in 2005 by the retired members of the School, Local Government, and Judicial Divisions, and was re-elected in 2009 and 2013, and served in this position until leaving the Board in June of 2017; and Whereas, during her tenure on the Board, Carole served as the Chair of the Board, and by virtue of the Chair position, served on the Executive and Evaluation Committees, as well as serving as a member of every Committee of the Board during her nearly two decades of service; and Whereas, Carole will be remembered for her leadership and efficient management of meeting time, her valuable advocacy on behalf of public educators, as well as her extensive knowledge of retiree health care, investment fundamentals, retirement security issues, the English language, and the national and Colorado political landscapes; and Whereas, Carole participated in all PERA Board meetings and her pragmatic sensibilities earned her respect from staff and her colleagues; and Whereas, Carole embodied the highest qualities of a Trustee and served as a role model for others to emulate; and Whereas, throughout her tenure on the Board, Carole earned the admiration and esteem of PERA Board members and staff; and Whereas, Carole s term on the Board of Trustees of PERA ended in June 2017, now therefore, be it Resolved, that with the highest level of appreciation, the Board of Trustees of PERA formally recognize and thank Carole Wright for her service to the membership of PERA during her time as a member of the Board of Trustees, and wish her well as she embarks on new adventures and seeks new challenges; and Resolved, that a copy of this Resolution be placed in the official minutes of the September 22, 2017, PERA Board of Trustees meeting. A motion was made by Marcus Pennell and seconded by Julie Friedemann that, the foregoing proclamation be approved. The motion passed.

3 Page 3 of 6 Committee Reports Executive Committee Report Marcus Pennell, Vice Chairman, reported that the Executive Committee met on September 18, 2017, and approved the June 20, 2017, Committee Minutes. The Committee was provided information regarding the May 31, 2017, June 30, 2017, and July 31, 2017, Unaudited Financial Statements and the June 30, 2017, July 31, 2017, and August 31, 2017, Budget Reports. The Committee also discussed Committee Assignments and the Executive Director Evaluation 2017 Timeline. In addition, the Committee discussed the Planning Session items and received information from Mr. Smith regarding the Strategic Planning Priority 1, extensive discussion ensued. Finally, the Committee reviewed the agenda for the September 22, 2017, Board Meeting CEM Report Karl Paulson, PERA Director of Planning, Policy, and Budget, introduced Tom Scheibelhut, Managing Principal, CEM Benchmarking. Mr. Scheibelhut reviewed the 2016 CEM Report presentation. The information was transmitted to Trustees as Tab H. Mr. Scheibelhut responded to questions. Actuarial Assumption Workshop Discussion Timothy M. O Brien, Chairman, Board of Trustees, opened the floor for discussion regarding an Actuarial Assumption Workshop. A motion was made by Susan Murphy and seconded by Carolyn Jonas-Morrison that, the Board receive an Actuarial Workshop in mid-year in The motion was approved. Committee Reports (Continued) Benefits Committee A motion was made by Carolyn Jonas-Morrison that the Benefits Committee recommends that, the Board of Trustees approve the development of a plan to open additional satellite offices over the next three to five years as proposed in Tab C of the Benefits Committee materials dated June 22, The motion was approved. PERA Strategic Planning: Priority 1 Timothy M. O Brien, Chairman, Board of Trustees, and Gregory W. Smith, PERA Executive Director, opened the floor for discussion. A motion was made by Roger Johnson and seconded by David Hall that, after extensive analysis and statewide outreach to all stakeholders, the Board endorses the following comprehensive package of reforms designed to accomplish the Board's goal of 100% funding in 30 years and directs staff to educate members, retirees, and stakeholders regarding the proposed package.

4 Page 4 of 6 The following changes are recommended to be effective as of January 1, 2020: Change the Highest Average Salary calculation to include 5 years with a base year and an 8 percent spike cap applicable to non-vested members as of 1/1/2020 and members hired on or after 1/1/2020. In the Judicial Division, change the HAS to 3 years with a base year and an 8 percent (8%) spike cap for non-vested Judges as of 1/1/2020 and Judges hired on or after 1/1/2020. Modify the definition of PERA includable salary to include Internal Revenue Code (IRC) Section 125 and 132 deductions. Change the minimum retirement age for full service retirement to 65 with 5 years of service for members hired on or after 1/1/2020. A member hired on or after 1/1/2020 will be eligible to retire with a full service retirement with 40 years of service at any age. For State Troopers, change the minimum age for full service retirement eligibility to age 55 with 25 years of service for members hired on or after 1/1/2020. Change the minimum age for reduced service retirement to 55 with 25 years of service or age 60 with 5 years of service for members hired on or after 1/1/2020. For State Troopers, change the minimum age for reduced service eligibility to 55 with 20 years of service or age 60 with 5 years of service for members hired on or after 1/1/2020. Modify service credit accrual for members hired on or after 1/1/2020 to be calculated based on member s employment as a percentage of full time employment. The following changes are recommended to be effective the date the bill becomes law: Reduce the Cost of Living Adjustment (COLA) for all PERA members and retirees to 1.5 percent (1.5%) effective on the date the bill becomes law. Institute a two year suspension of payment of the Cost of Living Adjustment for benefit recipients who have received a Cost of Living adjustment upon the effective date of the bill. Extend the current one year waiting period before receiving a Cost of Living Adjustment to three years for all members and benefit recipients who have not received a Cost of Living adjustment upon the effective date of the bill. Change the discount rate used to calculate the cost for an employer to disaffiliate or terminate affiliation to 200 basis points less than the Board s long-term assumed rate of return at the time of disaffiliation or termination of affiliation.

5 Page 5 of 6 The following benefit changes are recommended to be effective as of January 1, 2020: Increase contributions an additional three percent (3%) above the current member contribution rate for members hired before 1/1/2020. Increase contributions an additional two percent (2%) above the current member contribution rate for members hired on or after 1/1/2020. Increase contributions an additional two percent (2%) above the current employer contributions. Finally, to ensure that all Divisions are performing at least in accordance with an ADC standard, the recommendation shall include provisions that allow for the member contributions, employer contributions and the amount of the Cost of Living Adjustment to adjust based on the financial condition of the overall fund. Contributions will vary up to an additional two percent (2%) and down to current 2017 rates. The Cost of Living Adjustments will vary down to a floor of one half of one percent (0.5%) and up to a cap of 2 percent (2%). The motion passed with one dissenting vote by Ryan Parsell. Strategic Communications Outreach Plan/PERAtour Gregory W. Smith, PERA Executive Director, and Tara May, PERA Chief Communications Officer reviewed a presentation regarding the PERAtour Outreach plan. Information regarding the tour schedule was transmitted to Trustees as Tab I and the presentation will be provided as an Exhibit to the meeting minutes. Executive Director Performance Report Operations Gregory W. Smith, PERA Executive Director, reviewed the Executive Director Performance Report which was transmitted to Trustees as Tab J. David Hall left the meeting at 10:26 a.m. and did not return. Legislative Update Gregory W. Smith, PERA Executive Director, reviewed the Legislative Update presentation. This information was transmitted to Trustees as Tab K. Governance Consultant Karl Paulson, PERA Director of Planning, Policy, and Budget, provided information regarding the Governance Consultant. Information related to this issue was transmitted to Trustees as Tabs L1 and L2. A motion was made by Bob Lamb and seconded by Roger Johnson that, the Board continues to retain Cortex Applied Research as its Governance Consultant. The motion passed.

6 Page 6 of 6 Carolyn Jonas-Morrison left the meeting at 11:06 a.m. and did not return. Staff Reports Executive Director Report Gregory W. Smith, PERA Executive Director, reviewed the Executive Director Report which was transmitted to Trustees as Tab M. Market & Portfolio Update Amy McGarrity, PERA Chief Investment Officer, provided a market and portfolio update presentation. The Investment Performance Report and presentation were transmitted to Trustees as Tabs N1 and N2. Chief Benefits Officer Update Donna Baros, PERA Chief Benefits Officer, provided information regarding her report, which was transmitted to the Trustees as Tab O on September 8, General Counsel Update Adam L. Franklin, PERA General Counsel, reported that the General Counsel update was transmitted to Trustees as Tab P on September 14, Other Business With no further business to discuss, Mr. O Brien adjourned the meeting at 11:41 a.m. Board Meeting Dates November (16) 17, 2017 Timothy M. O Brien, Chairman, Board of Trustees Gregory W. Smith, Executive Director Approval Date: November 17, 2017 Respectfully submitted by Brenda E. Meidl Manager of the Executive Director s Office