Colorado Public Employees Retirement Association Board Meeting Minutes

Transcription

1 Colorado Public Employees Retirement Association Board Meeting Minutes Raymond Doc Heath Memorial Boardroom 1301 Pennsylvania Street Denver, Colorado 8:30 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 8:32 a.m. Approval of Consent Agenda A motion was made by Susan Murphy and seconded by Bill Parker that the Board of Trustees approve the Consent Agenda as published with the following items: a. Approval of Agenda b. Approval of September 20, 2017, Board Planning Session Minutes (Tab A) c. Approval of September 21, 2017, Board Planning Session Minutes (Tab B) d. Approval of September 22, 2017, Board Meeting Minutes (Tab C) Public Comment The following made public comments to the Board: Hospitality Workers Union on behalf of the Hotel Pullman San Francisco Bay employees; Karen Magnuson, President, Colorado School and Public Employees Retirement Association; and Lynea Hansen, Executive Director, Secure PERA. Calendar Year 2018 Committee Preferences Timothy M. O Brien, Chairman, Board of Trustees, asked Trustees to complete the 2018 Committee Preferences form and submit it to staff as soon as possible. The form was transmitted to Trustees as Tab D.

2 Page 2 of 7 Committee Reports Executive Committee Report Marcus Pennell, Vice Chairman, reported that the Executive Committee met on November 13, 2017, and approved the September 18, 2017, Executive Committee Minutes. The Committee reviewed the August 31, 2017, and September 30, 2017, Unaudited Financial Statements and the September 30, 2017, and October 31, 2017, Budget Reports. In addition, they discussed the September 2017 Board Planning Session and reviewed the November 16-17, 2017, Board Meeting Agenda and Schedule. Audit Committee Robert Lamb, Chairman, Audit Committee, reported the Committee had met the previous day. The Committee reviewed the Colorado PERA 2017 Financial Audit Plan and the Colorado PERA Comprehensive Annual Financial Report Timetable. In addition, the Committee reviewed the Internal Audit 2017 Risk Assessment and approved the Internal Audit 2018 Plan and Budget. The Committee also discussed prior audits and Internal Audit activity and special projects/reviews. The Committee met privately and separately with PERA s Executive Director, General Counsel, and Director of Internal Audit. Finally, the Committee approved the Annual Summary Report to the Board of Trustees on Audit Committee Activities. Benefits Committee Carolyn Jonas-Morrison, Chair, Benefits Committee, reported that the Committee had met the previous day and received the Life Insurance and Disability Program Annual Review and information regarding the Disability Strategic Initiative, PERA s 401(k) and Defined Contribution Plan and Trust Document, and Statement of Investment Policy (SIP). In addition, the Committee received updates regarding the Capital Accumulation Plan (CAP) and PERACare. A motion was made by Carolyn Jonas-Morrison that the Benefits Committee recommends that the Board of Trustees approve the revisions to PERA s 401(k) and Defined Contribution Plan and Trust Document as included in Tab E of the Benefits Committee materials dated November 16, Compensation & Budget Committee Roger Johnson, Chair, Compensation and Budget Committee, reported that the Committee met on October 23, 2017, and approved the 2018 Operating Budget. This information was transmitted to Trustees as Tab E. Mr. Johnson responded to questions. A motion was made by Roger Johnson that the Compensation and Budget Committee recommends that the Board of Trustees approve the 2018 PERA Operating Budget in the total amount of $79,687,272. Mr. Johnson and staff responded to questions. The motion was approved, with one abstention by Lynn Turner.

3 Page 3 of 7 Investment Committee Susan Murphy, Chair, Investment Committee, reported that the Committee met the previous day. the Board of Trustees approve that the benchmark for the Calmwater Fund III investment, effective the first day of the calendar quarter following the first capital call, be as follows: 2/3 NFI-ODCE Index 1/3 Bloomberg Barclays Intermediate U.S. Government Bond Index. the Board of Trustees approve that the benchmark for the SSG SLO II investment, effective the first day of the calendar quarter following the first capital call, be the BofA Merrill Lynch Asian Dollar High Yield Corporate Index. Staff responded to questions. A motion was made by Susan Murphy that the Investment Committee recommends that the Board of Trustees approve the following 2018 Performance Awards Scales. Performance Award Assets Benchmark Scale Total Fund Policy Benchmark 0-40 bp Global Equities Global Equity Custom Benchmark 0-35 bp Fixed Income Fixed Income Custom Benchmark 0-25 bp Real Estate Real Estate Custom Benchmark 0-50 bp Private Equity Burgiss Pooled Return bp Opportunity Fund Opportunity Fund Benchmark 0-50 bp The foregoing motion was approved.

4 Page 4 of 7 the Board of Trustees approve the following phase-in schedule for the Opportunity Fund incentive Performance Period timeframes. Year Short Term Performance Long Term Performance Year 3-Year Year 4-Year Year 5-Year Staff responded to questions. The foregoing motion was approved. the Board of Trustees approve the incentive calculations for the Opportunity Fund performance to be calculated on a net-of-fee basis, when possible, and that the Investment Department Incentive Plan Document be amended to reflect the change effective Staff responded to questions. Shareholder Responsibility Committee Lynn Turner, Chair, Shareholder Responsibility Committee, reported that the Committee met the previous day. The Committee received information regarding proxy voting. Mr. Turner responded to questions. Walker Stapleton arrived at 9:28 a.m. and took Mr. Parsell s place at the meeting. Stakeholder Relations Committee Amy Grant, Chair, Stakeholder Relations Committee, reported that the Committee met the previous day. The Committee received information regarding the PERAtour. Interest on Member Accounts Karl Paulson, PERA Director of Planning, Policy, and Budget, and Lawrence Mundy, PERA Chief Financial Officer, provided information regarding interest on member accounts. The information was transmitted to Trustees as Tab H. A motion was made by Lynn Turner and seconded by Susan Murphy that the Board of Trustees approve 3.0 percent as the interest credit rate on member accounts for 2018 pursuant to CRS (4) and Tab H.

5 Page 5 of 7 Board Election Calendar Ron Baker, PERA Chief Administrative Officer, provided information regarding the Board Election Calendar which was transmitted to Trustees as Tab I. A motion was made by David Hall and seconded by Julie Friedemann that the Board of Trustees approve the 2018 Board Election Calendar as it appears in Tab I in the meeting materials. Legislative Update Gregory W. Smith, PERA Executive Director, presented the legislative update and responded to questions. Strategic Initiative Priority 1 Gregory W. Smith, PERA Executive Director, Tara May, PERA Chief Communications Officer, and Ed Koebel, Principal and Consulting Actuary, Cavanaugh Macdonald Consulting, provided information regarding the Strategic Initiative Priority 1. Staff responded to questions and discussion ensued. The Board recessed at 10:23 a.m. and reconvened at 10:35 a.m. Strategic Initiative Priority 1 (Continued) Gregory W. Smith, PERA Executive Director, and Ron Baker, PERA Chief Administrative Officer, continued the discussion regarding the Strategic Initiative Priority 1. Extensive discussion ensued and Mr. Smith, Adam Franklin, PERA General Counsel, and Ed Koebel, Principal and Consulting Actuary, Cavanaugh Macdonald Consulting, responded to questions. Walker Stapleton left the meeting at 11:50 a.m. and Ryan Parsell took his place at the meeting. The Board recessed at 12:23 p.m. and reconvened at 1:04 p.m. Will Bain left at the recess and did not return. Rules Hearing Kevin Gallaway, PERA Staff Attorney, and Megan Peitzmeier, PERA Staff Attorney, reviewed the proposed changes to the PERA Rules. The presentation was transmitted to Trustees as Tab K. A motion was made by Ryan Parsell and seconded by Bill Parker that the Board of Trustees approve and adopt the proposed amendments, additions, and deletions made to the PERA Rules, along with the Statement of Basis and Purpose, as distributed to the Board as Tab K, with an effective date of January 1, 2018, or if necessary due to the

6 Page 6 of 7 timing of the approval of the Attorney General, February 1, The motion was approved CAFR Timeline Lawrence Mundy, PERA Chief Financial Officer, provided information regarding the 2017 CAFR, which was transmitted to Trustees as Tabs L1 and L2. Mr. Mundy responded to questions. Executive Director Performance Report Asset Management Gregory W. Smith, PERA Executive Director, reviewed the Executive Director Performance Report, which was transmitted to Trustees as Tab M. OPEB Funding Policy Ron Baker, PERA Chief Administrative Officer, provided information regarding the OPEB Funding Policy and introduced Koren Holden, PERA Senior Project Manager. Ms. Holden reviewed the presentation, which was transmitted to Trustees as Tab N1. Additional information was transmitted to Trustees as Tabs N2 and N3. Carolyn Jonas-Morrison left the meeting at 2:19 p.m. and did not return. The Board recessed at 2:22 p.m. and reconvened at 2:30 p.m. Staff Reports Executive Director Report Gregory W. Smith, PERA Executive Director, reviewed the Executive Director Report, which was transmitted to Trustees as Tab O. 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 P1 and P2. Chief Financial Officer Update Lawrence Mundy, PERA Chief Financial Officer, reviewed the Chief Financial Officer update, which was transmitted to Trustees as Tab Q. General Counsel Update Adam L. Franklin, PERA General Counsel, reported that the General Counsel update was transmitted to Trustees as Tab R. Mr. Franklin requested that the Board go into Executive Session. A motion was made by Ryan Parsell and seconded by Julie Friedman to go into Closed Executive Session. The motion was approved and the Board went into Closed Executive Session at 3:12 p.m. The Executive Director, all the Chief Officers, the Directors of Internal Audit, Planning, Policy, and Budget, the Public

7 Page 7 of 7 Information Officer, and the Manager of the Executive Director s Office were present for the Closed Executive Session. The Closed Executive Session concluded at 3:20 p.m. By my signature below, I certify that the only issues discussed by the members of the Board during the Closed Executive Session were regarding pending and imminent litigation and legal advice related to specific questions involving PERA constituting attorney client communication. Timothy M. O Brien, Chairman, Board of Trustees Board Meeting Dates A motion was made by Roger Johnson and seconded by Susan Murphy that the Board of Trustees approve the following 2018 Board Meeting Dates: January 19, 2018 March (15) 16, 2018 June (21) 22, 2018 September 19 21, 2018 Planning Session November (15) 16, 2018 Other Business With no further business to discuss, Timothy M. O Brien, Chairman, Board of Trustees, adjourned the meeting at 3:22 p.m. Timothy M. O Brien, Chairman, Board of Trustees Respectfully submitted by Brenda E. Meidl Manager of the Executive Director s Office Ron Baker, Interim Executive Director Approval Date: January 19, 2018