TEACHERS RETIREMENT BOARD REGULAR MEETING

Transcription

1 TEACHERS RETIREMENT BOARD REGULAR MEETING Item Number: 10b SUBJECT: Approval of Minutes of the July 14, 2016 Regular Meeting Teachers Retirement Board Open Session CONSENT: ATTACHMENT(S): 0 ACTION: DATE OF MEETING: September 15, 2016 INFORMATION: PROPOSED MINUTES Teachers Retirement Board Regular Meeting July 14, 2016 OPEN SESSION LOCATION: Truckee River and Yosemite Falls Rooms, 100 Waterfront Place, West Sacramento, CA BOARD MEMBERS PRESENT Dana Dillon, Chairperson Sharon Hendricks, Vice Chairperson Joy Higa Harry Keiley Tom Unterman Nora Vargas Grant Boyken, representing the State Treasurer, John Chiang Eraina Ortega, representing the Director of Finance, Michael Cohen Michelle Zumot, representing the State Superintendent of Public Instruction, Tom Torlakson Betty Yee, State Controller OTHER BOARD MEMBERS PRESENT Eric Lawyer, representing the State Treasurer, John Chiang Lynn Paquin, representing the State Controller, Betty Yee BOARD MEMBERS ABSENT Paul Rosenstiel STAFF PRESENT Jack Ehnes, Chief Executive Officer Christopher Ailman, Chief Investment Officer Brian J. Bartow, General Counsel TRB 90 1

2 Lisa Blatnick, Chief of Administrative Services Ed Derman, Deputy Chief Executive Officer, Plan Design and Communication Ashish Jain, Chief Technology Officer Cassandra Lichnock, Chief Operating Officer Robin Madsen, Chief Financial Officer Andrew Roth, Benefits and Services Executive Officer Jan Spano, Director of Enterprise Strategy Management Jennifer Yamane, Senior Counsel OTHERS PRESENT Harvey Leiderman, Reed Smith, LLP (Fiduciary Counsel) Alexandra Poe, Reed Smith, LLP (Fiduciary Counsel) Amy McDuffee, AON Hewitt Mitch Munt, Jones Lang LaSalle Greg Levi, Jones Lang LaSalle Graeme Finley, Grant Thornton, LLP Denise Bradford, CTA Phyllis C. Hall, CTA Jennifer Baker, CTA Dave Walrath, CalRTA Ivan Carrillo, ACSA Pat Geyer, CalRTA Paula H. Weiss, CalRTA Chris Davis, Ceres A quorum being present, Chairperson Dillon called the Open Session meeting of the Teachers Retirement Board to order at 8:37 a.m. I. APPROVAL OF BOARD AGENDA/WORK PLAN (Item 1) MOTION duly made by, seconded by Mr. Boyken, and carried to approve the Board Agenda/Work Plan. Ms. Zumot, for the Superintendent of Public Instruction TRB 91 2

3 II. BOARD/COMMITTEE WORK PLANS FOR FISCAL YEAR (Item 2) a. Board Work Plan The board received an overview of the work plan for fiscal year from Mr. Ehnes, including the upcoming requests for proposals and subsequent interviews for board consultants, and larger scale projects such as the predicting teachers life span. The board noted there may be an additional item to the November agenda to consider the funding plan. joined the meeting at 8:45 a.m. b. Appeals Committee Work Plan The board received an overview of the Appeals Committee work plan for fiscal year from Ms. Zumot. c. Audits and Risk Management Committee Work Plan The board received an overview of the Audits and Risk Management work plan for fiscal year from Mr. Boyken, including updates on enterprise wide compliance, and a request for proposal for a new financial statement auditor. d. Benefits and Services Committee Work Plan The board received an overview of the Benefits and Services Committee work plan for fiscal year from, including the first adoption of the state contribution rate for the full funding plan. The board discussed the need to provide clarity to everyone concerning the funding plan, including the mechanics of the funding, the changes made, and understanding who bears the risk. e. Board Governance Committee Work Plan The board received an overview of the Board Governance Committee work plan for fiscal year from, including the board s focus on education, and highlighting the risk and compliance efforts over the audit process. f. Compensation Committee Work Plan The board received an overview of the Compensation Committee work plan for fiscal year from Chairperson Dillon, including the committee s work on investment performance, and benchmarking. g. Investment Committee and Subcommittee Work Plan The committee received an overview of the Investment Committee work plan for fiscal year from, including the carryover work from fiscal year , continuing to monitor fees, oversight over the new RMS allocation, and the asset allocation implications from the upcoming experience study. The board discussed highlighting changes to the work plans, when they are included on the agendas in subsequent meetings. TRB 92 3

4 MOTION duly made by, seconded by, and carried to approve the work plans for fiscal year Ms. Zumot, for the Superintendent of Public Instruction III. REVIEW AND REVISE BOARD DELEGATION OF AUTHORITY TO THE CEO (Item 3) The board received an overview of the proposed revisions to the delegation of authority from Mr. Ehnes and Mr. Bartow, as part of an annual review of the delegation. The board discussed the proposed revisions to the CEO s delegation to approve amendments to contracts up to fifteen percent of the cumulative value of contracts previously approved by the board. MOTION duly made by Ms. Ortega, seconded by, and carried to amend the proposed revisions to state The CEO is delegated additional authority to approve up to an additional fifteen percent (%15), not to exceed $1,000,000, in cumulative value on a contract previously approved by the Board. Ms. Zumot, for the Superintendent of Public Instruction Chairperson Dillon The board further discussed the remainder of the proposed revisions. Chairperson Dillon and Mr. Bartow were directed to discuss including compensation authority into the CEO s delegation, to keep all delegations in one document. MOTION duly made by, seconded by Mr. Boyken, and carried to adopt the delegated authority as amended. TRB 93 4

5 Ms. Zumot, for the Superintendent of Public Instruction Chairperson Dillon IV. CALSTRS STRATEGIC PLAN SECOND READING (Item 4) The board received an overview of the CalSTRS Strategic Plan from Ms. McDuffee and Ms. Spano, which is the result of deliberate, collaborative thorough process between CalSTRS staff, executives and board members. Ms. McDuffee noted three enhancements from the prior reading, notable the 3 year cycle, development of performance measures in concert with the development of the plan, and harmonizing with the CalSTRS core documents. The board discussed the asset allocation not conflicting with the Strategic Plan and providing sufficient flexibility to achieve the goals without being tied to specific requirements. The board discussed changes to Goal 1, Objective A, Measure 2, to achieve an investment return commensurate with the appropriate risk to achieve full funding to the system in 30 years, with a footnote specifying the current assumed rate of return (seven and a half percent), considering that the focus should be on the risk and strategy to achieve full funding rather than specific numbers. The board further discussed removing the word all from Goal 1, Objective D, Measure 1, Target, as well as all of Goal 2, Objective B, Measure 4. MOTION duly made by, seconded by, and carried to adopt the CalSTRS Strategic Plan Fiscal Years , as amended. Ms. Zumot, for the Superintendent of Public Instruction Chairperson Dillon RECESS The Open Session of the board meeting recessed at 10:00 a.m. and reconvened at 10:20 a.m. Mr. Unterman joined the meeting. TRB 94 5

6 V. PRELIMINARY EVALUATION OF LONG-TERM FACILITIES OPTIONS (Item 5) The board received an overview of the long-term facilities options from Ms. Blatnick, Mr. Munt and Mr. Levi, including four scenarios to develop tower II without third party tenants, develop tower II with third party tenants, develop tower II in 2029 while leasing space in the interim, and leasing only (without development of tower II). The board discussed the factors behind the net present values presented, the discount rates applied to ownership of the building, the public appetite for leasing buildings in West Sacramento, and potential future considerations, such changes to the future workforce and technological advancements. The board further discussed the 2016 engagement study conducted of CalSTRS employees and other employer benefits for owning its own building. The board expressed interest in having further research on the logistics and costs of building tower II. Ms. Baker, CTA, reminded the board of the political dynamics and conversations over the prior building, the potential optics of deciding to build, and the potential financial issues this may trigger with the state. Mr. Walwrath, CalRTA, also reminded the board of the budget issues, subject to the legislative committees, and advised outreach to the legislature on this. Mr. Walwrath further commented to be flexible with timing, and wait for a skilled work force to be available. VI. CONSENT AGENDA - ACTION (Item 6) a. Committee Reports 1. Appeals Committee: The Appeals Committee met on Friday, June 10, The committee reported taking no action on the Petitions for Reconsideration in the matters of (1) George Rush and (2) Ana Maria Clarillos. The committee also considered and announced the adoption of the proposed decisions in the matters of: (1) Thomas Williams; (2) Rosemary Fernandez, with minor technical corrections; and (3) Gary Woods, with minor technical corrections. The committee additionally received the Benefits and Services Executive Officer s Report. 2. Investment Committee: the report from the July Investment Committee will be presented at the next meeting. b. Approval of Minutes of the June 9, 2016 Regular Meeting Open Session c. Board Member Education TRB 95 6

7 MOTION duly made by Ms. Ortega, seconded by Mr. Unterman, and carried to adopt the Consent Agenda items (a)-(c). Mr. Unterman Ms. Zumot, for the Superintendent of Public Instruction Chairperson Dillon d. Approval of Employer Reimbursement for Board Member Services MOTION duly made by Ms. Ortega, seconded by Mr. Unterman, and carried to adopt the Consent Agenda item (d), with Chairperson Dillon,, and abstaining. Mr. Unterman Ms. Zumot, for the Superintendent of Public Instruction The board further directed Mr. Bartow to bring an item to the Board Governance Committee to consider updating section 500D(e) Board Compensation and Reimbursement of Employers, last amended in VII. ITEMS REFERRED BY COMMITTEE FOR BOARD DECISION (Item 7) There were no items referred by committee for board decision. VIII. NEW BUSINESS/REVIEW INFORMATION REQUESTS (Item 8) There were no new business/review information requests. I. DRAFT AGENDA FOR NET REGULAR MEETING OF THE TEACHERS RETIREMENT BOARD (Item 9) There were no changes to the next draft agenda. TRB 96 7

8 . OPPORTUNITY FOR ADDITIONAL STATEMENTS FROM THE PUBLIC There were no further statements from the public. RECESS The Open Session of the board meeting recessed at 11:20 a.m. and the board went into Closed Session. The board meeting reconvened in Open Session at 11:30 a.m. Chairperson Dillon reported there was nothing to report from Closed Session. I. ADJOURNMENT There being no further business to conduct, Chairperson Dillon adjourned the meeting at 11:30 a.m. Dana Dillon, Chairperson Jack Ehnes, Chief Executive Officer And Secretary to the Teachers Retirement Board Prepared by: Jennifer Yamane, Senior Counsel TRB 97 8