Minutes of the OHIO PUBLIC EMPLOYEES RETIREMENT SYSTEM

Transcription

1 Minutes of the OHIO PUBLIC EMPLOYEES RETIREMENT SYSTEM The monthly meeting of the Ohio Public Employees Retirement Board was held in the offices of the Board, Ohio Public Employees Retirement System building, 277 East Town Street, Columbus, Ohio at 9:00 a.m., Wednesday, November 19, Members present: Ms. Sharon Downs; Mr. Sean Loftus; Mr. David Payne, representing Mr. Robert Blair, Director, Department of Administrative Services; Mr. Matthew Schulz; Mr. Jim Tilling; and Ms. Cinthia Sledz. (Ms. Heather Link and Mr. Ken Thomas entered the meeting later.) Members absent: Mr. John Maurer and Mr. Robert Smith. Also present: Ms. Julie Becker, General Counsel; Ms. Karen Carraher, Executive Director; Ms. Carol Drake, Chief External Affairs Officer; Mr. Allen Foster, Director Benefits Administration; Mr. Greg Januszewski, Director Internal Audit; Mr. Walt Knox, Enterprise Chief Risk Officer; Mr. Chuck Quinlan, Director Information Technology; Mr. Richard Shafer, Acting Director Investments; Mr. Blake Sherry, Chief Operating Officer; Ms. Jenny Starr, Chief Financial Officer; Ms. Marianne Steger, Director Health Care; and Ms. Shelley Wilson, Director Human Resources. Mr. Loftus moved, Mr. Schulz seconded, to excuse the absence of Mr. Maurer. The motion passed without dissent. The statute does not require an excused absence for Mr. Smith, Investment Expert. Mr. Schulz moved, Ms. Downs seconded, to approve the minutes of the meeting held October 15, 2014, and the disability report, (see Appendix to the Minutes for report). Tilling, aye; Ms. Sledz, aye. 1

2 The Chair asked for the report from the Investment Committee. The Board reviewed the following report from the Investment Committee meeting: Investment Committee Minutes November 18, 2014 The regular monthly meeting of the Ohio Public Employees Retirement Board Investment Committee was held in the offices of the Board, Ohio Public Employees Retirement System building, 277 East Town Street, Columbus, Ohio at 12:50 p.m., Tuesday, November 18, Members present: Ms. Sharon Downs; Mr. David Payne, representing Mr. Robert Blair, Department of Administrative Services; Mr. Matthew Schulz; Mr. Robert Smith; Ms. Cinthia Sledz; Mr. Ken Thomas; and Mr. Jim Tilling. (Mr. Sean Loftus entered the meeting after roll call.) Members absent: Ms. Heather Link and Mr. John Maurer. Also present: Ms. Julie Becker, General Counsel; Ms. Karen Carraher, Executive Director; Mr. Greg Januszewski, Director Internal Audit; Mr. Walt Knox, Enterprise Chief Risk Officer; Mr. Richard Shafer, Acting Director Investments; Mr. Blake Sherry, Chief Operating Officer; and Ms. Jenny Starr, Chief Finance Officer. I. Action Items: No action items. II. Discussion Items: A. Mr. Bruce Hopkins from CEM reviewed the investment benchmarking results for the five-year period ending December B. Mr. Brad Sturm, Lead Portfolio Manager, reviewed the second quarter 2014 portfolio performance for real estate. Mr. Samir Sidani, Lead Portfolio Manager, 2

3 reviewed the second quarter 2014 portfolio performance for private equity. Mr. John Blue, Portfolio Manager, reviewed the second quarter 2014 portfolio performance for hedge funds. Mr. Peter Hill from Hewitt EnnisKnupp reviewed a recommendation when OPERS changed its Hedge Funds portfolio benchmark from the greater of 7% annually or LIBOR +4% to a peer-based benchmark comprised of a custom blend of hedge fund peer index strategy benchmarks from Hedge Fund Research, it contemplated an annual re-weighting of the custom blend. Staff recommended and the Board concurred that these peerbased benchmarks will be developed annually by the staff with the concurrence of the Board s investment consultant and will be shared with the Board each November prior to their inclusion in the Annual Investment Plan for the following year. (Mr. Thomas left the meeting.) Ms. Suzanne Bernard and Mr. Satya Kumar from Hewitt EnnisKnupp made an educational presentation on the ten myths of investment consulting and on investing in real assets why it s not all about inflation protection. C. Mr. Craig Svendsen and Ms. Chenae White from NEPC reviewed third quarter 2014 investment performance. Included in the meeting materials was a memo from NEPC on the recently created HC 115 Trust. Staff has submitted a private letter ruling from the IRS that would allow the current 401(h) Trust to be used to fund the 115 Trust over time. NEPC recommends the 115 Trust adopt the same asset allocation as the 401(h) Trust once the private letter ruling is received. Included in the meeting materials was a report from NEPC on the annual Defined Contribution update. Ms. Sledz moved, Mr. Schulz seconded, to recommend approval to the full Board the annual Defined Contribution update as presented by staff. Mr. Loftus, aye; Mr. Payne, aye; Mr. Schulz, aye; Ms. Sledz, aye; Mr. Tilling, aye; Mr. Smith, aye. 3

4 D. The Committee had a discussion with NEPC. Mr. Tilling moved, Mr. Schulz seconded, to adjourn the Committee meeting. The motion passed without dissent. The Committee meeting was adjourned at 3:30 p.m. Mr. Schulz moved, Mr. Payne seconded, to accept the annual Defined Contribution update as recommended in the Investment Committee report. Tilling, aye; Ms. Sledz, aye. The Chair asked for the report from the Health Care Committee. The Board reviewed the following report from the Health Care Committee meeting: Health Care Committee Minutes November 18, 2014 The Ohio Public Employees Retirement Board Health Care Committee met in the offices of the Board, Ohio Public Employees Retirement System building, 277 East Town Street, Columbus, Ohio at 3:40 p.m., Tuesday, November 18, Members present: Ms. Sharon Downs; Mr. Sean Loftus; Mr. David Payne, representing Mr. Robert Blair, Director, Department of Administrative Services; Mr. Matthew Schulz; Ms. Cinthia Sledz; Mr. Robert Smith; and Mr. Jim Tilling. Members absent: Ms. Heather Link; Mr. John Maurer and Mr. Ken Thomas. Also present: Ms. Julie Becker, General Counsel; Mr. Allen Foster, Director Benefits; Mr. Greg Januszewski, Director 4

5 Internal Audit; Mr. Walt Knox, Enterprise Chief Risk Officer; Mr. Blake Sherry, Chief Operating Officer; Ms. Jenny Starr, Chief Financial Officer; and Ms. Marianne Steger, Director Health Care. The Committee Vice-Chair, Ms. Sharon Downs, called the meeting to order. A memo was provided to the Committee on the use of electronic fund transfer (EFT) for individuals participating in the Member Directed VEBA Retiree Medical Account (RMA). Individuals currently participating in the Member Directed VEBA RMA are not required to use EFT for the reimbursement of qualified medical expenses. Health Care is requesting that participants in the Member Directed VEBA be required to receive their reimbursements for qualified medical expenses by EFT. Earlier this year the Board approved EFT for the Wellness RMA. Ms. Sledz moved, Mr. Schulz seconded, to recommend approval to the full Board that individuals participating in the Member Directed VEBA RMA receive reimbursement by EFT as presented by staff. Roll call vote was taken as follows: Mr. Loftus, aye; Mr. Payne, aye; Mr. Schulz, aye; Ms. Sledz, aye; Mr. Smith, aye; Mr. Tilling, aye; Ms. Downs, aye. Ms. Steger, Ms. Gretchen Feldman, Health Care Project Manager, and Mr. Greg McLaughlin, Health Care Strategy & Communications Officer, provided an update on the Connector implementation. They also provided an update on the Connector readiness kit and conducted a website demonstration on the Connector readiness web pages. Mr. Smith moved, Mr. Loftus seconded, to adjourn the committee meeting. The committee meeting adjourned at 4:40 p.m. Ms. Downs moved, Mr. Loftus seconded, to approve that individuals participating in the Member Directed VEBA RMA receive reimbursement by EFT as recommended in the Health Care Committee report. 5

6 Tilling, aye; Ms. Sledz, aye. Ms. Sledz called on Ms. Laura Parsons, Associate Counsel, to report on the membership determination appeal in the matter of Kathy Ann Cain and Ohio Arts Council. The Board is being asked to consider whether the Claimant was a public employee eligible for OPERS membership for her service with the Ohio Arts Council from September 4, 1984 through September 15, (Mr. Thomas entered the meeting during the discussion.) The hearing examiner prepared a February 21, 2014 Report and Recommendation to the Board with findings of fact and conclusions of law. The Arts Council filed written objections to the Report and Recommendation on March 7, The Board was provided with copies of the Report and Recommendation, Hearing Transcript and Exhibits, Deposition Transcript, and Objections to the Report and Recommendation filed by OPERS in advance of the Board meeting. Ms. Elizabeth Bullock, representing Ms. Cain, was present and addressed the Board. Ms. Angela Sullivan, from the Attorney General s Office representing the Ohio Arts Council, was present and addressed the Board. After discussion, Ms. Downs moved, Mr. Thomas seconded, to accept the findings of fact and reject the conclusions of law to find that the Claimant was not a public employee while employed by the Ohio Arts Council during the entire period in question. Thomas, aye; Mr. Tilling, aye; Ms. Sledz, aye. 6

7 Under Ohio Revised Code , the Board is required to designate a person who is a licensed state retirement system investment officer to be the Chief Investment Officer for OPERS. The Board must notify the Ohio Division of Securities in writing of its designation within ten days of the Board s designation. General Counsel Julie Becker recommended the Board designate Richard D. Shafer, Acting Director, Investments, as the current Chief Investment Officer for OPERS and direct the Executive Director to notify the Ohio Division of Securities of its designation. Mr. Tilling moved, Mr. Schulz seconded, to designate Richard D. Shafer as Chief Investment Officer for OPERS pursuant to Ohio Revised Code Section Thomas, aye; Mr. Tilling, aye; Ms. Sledz, aye. Ms. Lauren Gresh, Associate Counsel, and Ms. Debbie McCarthy, Assistant Government Relations Officer, presented proposed rule changes. At the Board s September 17, 2014 meeting, the Board took action on several recommendations affecting the Defined Contribution Plans and the Member Directed Retiree Medical Account (held in the VEBA Trust). The amendments presented by staff to the Administrative Code and plan documents will instruct the implementation of the recommended changes. (Ms. Link entered the meeting during the discussion.) Mr. Schulz moved, Ms. Downs seconded, to approve for submission to the Joint Committee on Agency Rule Review the amendments to the Defined Contribution Plans and the Member- Directed Retiree Medical Account (held in the VEBA Trust); authorize the Executive Director to execute Amendment Twelve to the Combined Plan Document; authorize the Executive Director to execute Amendment Twelve to the Member Directed Plan Document; and authorize the Executive Director to 7

8 execute Amendment Five to the VEBA Health Plan, as presented and discussed with staff. Ms. Link, aye; Mr. Loftus, aye; Mr. Payne, aye; Mr. Schulz, aye; Mr. Thomas, aye; Mr. Tilling, aye; Ms. Sledz, aye. Ms. Carraher provided the Board with a summary of the progress on the 2014 OPERS strategic plan initiatives and previewed the upcoming key 2015 strategic plan initiatives. Ms. Carraher reviewed the Board proposed format changes that resulted from the February 2014 Board Governance meeting with Nancy Williams and was seeking feedback from the Board on if these changes should be continued or modified. Ms. Carraher and Mr. Gordon Gatien, Government Relations Officer, updated the Board on recent discussions with legislators on global custodian. Staff will keep the Board updated on any potential changes. Ms. Downs moved, Mr. Loftus seconded, to enter executive session to discuss pending litigation. Ms. Link, aye; Mr. Loftus, aye; Mr. Payne, aye; Mr. Schulz, aye; Mr. Thomas, aye; Mr. Tilling, aye; Ms. Sledz, aye. By acclamation, the Board came out of executive session. Mr. Schulz moved, Mr. Thomas seconded, to authorize the Attorney General s Office to take actions as discussed and outlined in executive session. Ms. Link, aye; Mr. Loftus, aye; Mr. Payne, aye; Mr. Schulz, aye; Mr. Thomas, aye; Mr. Tilling, aye; Ms. Sledz, aye. 8

9 Ms. Downs moved, Mr. Loftus seconded, the meeting be adjourned until the next regular meeting to be held Wednesday, December 17, 2014 at 9:00 a.m. in the offices of the Board. The motion passed without dissent. The meeting adjourned at 11:30 a.m. 9