Colorado Public Employees Retirement Association Board Meeting Minutes

Transcription

1 Colorado Public Employees Retirement Association Board Meeting Minutes Cheyenne Mountain Resort 3225 Broadmoor Valley Road Colorado Springs, Colorado September 18, :00 a.m. Trustees Present: Trustees Via Conference Call: Trustees Absent: Staff Present: Maryann Motza, Chair, Carolyn Jonas-Morrison, Vice Chair, Brian T. Campbell, Richard Delk, Karl Fisch, Jon Forbes, Amy Grant, Roger Johnson, Susan Murphy, Amy Nichols, Scott Noller, Marcus Pennell, Walker Stapleton, Carole Wright Lynn Turner Timothy M. O Brien Martha Argo, Ron Baker, Donna Baros, Maureen Cowell, Mark Eden, Adam Franklin, Kimberly Gardner, Karl Greve, Katie Kaufmanis, Linda Marquez, David Mather, Amy McGarrity, Brenda Meidl, Leslie Oliver, Jennifer Paquette, Karl Paulson, Gregory W. Smith, Megan Westberg Maryann Motza, Chair, Board of Trustees, called the meeting to order at 8:03 a.m. Approval of the Consent Agenda A motion was made by Susan Murphy and seconded by Amy Nichols that, The Board approve the Consent Agenda as published with the following items: The Board Agenda Approval of June 23, 2015, Board Meeting Minutes Approval of August 26, 2015, Board Meeting Minutes Appointment of Brian Campbell Sudan Report Resolution to Invest in Securities in India Committee Assignments The motion was approved. Public Comment There was no public comment.

2 Page 2 of 10 Proclamation James Casebolt Maryann Motza, Chair, Board of Trustees, asked the Board to consider the following Resolution: Proclamation Concerning The Honorable James Casebolt Whereas, The Honorable James Casebolt served as a Trustee on the Board of the Colorado Public Employees Retirement Association (PERA) from July 1999 through June 2015, and had a distinguished 16-year tenure representing the members of the Judicial Division; and Whereas, during his time on the Board, Jim was a member of and chaired numerous Board committees, notably participating as a valuable member of the Ad Hoc Committee to Hire General Counsel in 2001, as Chair of the Health Care Ad Hoc Committee in 2002, and as Chair of the Executive Director Search Committee in 2012; and Whereas, Jim provided valuable leadership and wisdom during his tenure as Vice Chair of the Board between 2001 and 2003 and as Chair from 2003 until 2007, ensuring the stability of the Association during a tumultuous time; and Whereas, Jim was the primary drafter of the Board s Statement on Divestment in 2007, a policy that even today withstands ever-evolving attitudes on the role of large institutional investors in our global economy; and Whereas, Jim played a vital role in the Board s shared sacrifice approach in their 2009 recommendation to the Colorado General Assembly, which ultimately became Senate Bill ; and Whereas, Jim participated in all PERA meetings and will be remembered for his calm approach to complex issues, his critical thinking abilities, and his passion for doing what was ethical and in the best interests of PERA and the membership, which garnered respect from his colleagues; and Whereas, Jim embodied the highest qualities of a Trustee and served as a role model for others to emulate; and Whereas, through his effective leadership, Jim earned the admiration and esteem of the PERA Board members and staff; and Whereas, Jim s term on the Board of Trustees of PERA ended in June 2015, now therefore, be it

3 Page 3 of 10 Resolved, that with the highest level of appreciation and congratulations, the Board of Trustees of PERA formally recognize and thank James Casebolt for his service to the membership of PERA during his time as a member of the Board of Trustees, and wish him happiness and prosperity as he leaves the PERA Board and enters retirement; and Resolved, that a copy of this Resolution be placed in the official minutes of the September 18, 2015, PERA Board of Trustees meeting. A motion was made by Carole Wright and seconded by Marcus Pennell that the foregoing Resolution be adopted. The motion was approved. Memoriam Wendy Tenzyk Maryann Motza, Chair, Board of Trustees, asked the Board to consider the following Resolution: IN MEMORIAM Wendy Tenzyk Whereas, Wendy Tenzyk, former Colorado PERA Insurance Director, passed away on July 15, 2015, at the age of 65; and Whereas, Wendy began her extensive career with PERA in 1988 serving as the Assistant Director of the Retirement Services Division and then as the Director of Retirement Services and Benefit Services; and Whereas, Wendy was named Director of the newly formed Insurance Division in 2001, a position she held until her retirement; and Whereas, Wendy was a Fellow of the International Society of Certified Employee Benefit Specialists (ISCEBS) and was highly respected for her expertise and contributions to retiree health care communities in Colorado and nationally; and Whereas, Wendy was the consummate professional and will be remembered for her soft-spoken demeanor, her vast knowledge of the insurance industry, her unrivaled attention to detail, and her impeccable style; and Whereas, Wendy was an active member of her church and was a dedicated Boy Scouts of America volunteer; and Whereas, it is self-evident that PERA will be forever indebted to Wendy, now therefore, be it

4 Page 4 of 10 Resolved, that with profound gratitude, the Board of Trustees of PERA memorialize Wendy Tenzyk for her many contributions and accomplishments during her 27-year career at PERA; and Resolved, that the PERA Board and staff extend their sincere condolences to her husband Al and son Ryan, and that a copy of this resolution be presented to the family; and Resolved, that a copy of this Resolution be placed in the official minutes of the September 18, 2015, PERA Board of Trustees meeting. A motion was made by Carole Wright and seconded by Amy Nichols that the foregoing Resolution be adopted. The motion was approved. Memoriam Joseph Natale Maryann Motza, Chair, Board of Trustees, asked the Board to consider the following Resolution: IN MEMORIAM Joseph Natale Whereas, Joseph P. Natale, former Colorado Public Employees Retirement Association (PERA) Executive Secretary, passed away on August 3, 2015, at the age of 92; and Whereas, Joe had exemplary academic credentials preparing him for his life-long career in public service, earning degrees in management and government from the University of Denver, and completing graduate work in business at Harvard University, the University of California, and Stanford University; and Whereas, Joe built a solid foundation in leadership serving our country in the United States Navy during World War II; and Whereas, Joe joined PERA as Assistant Executive Secretary in 1964 and served in that role for 13 years; and Whereas, Joe became PERA s third Executive Secretary in 1977 and led PERA until his retirement; and Whereas, when Joe retired in 1984, PERA had nearly 100,000 active members, 24,000 retirees, and $4 billion in assets; and Whereas, during Joe s tenure, PERA began the development of a retiree health care program and sought legislation to add a 401(k) plan for the membership; and

5 Page 5 of 10 Whereas, Joe s vision for these important voluntary programs lives on today in the PERACare and PERAPlus Plans; and Whereas, Joe not only worked on behalf of Colorado s public employees, he was also President of the National Council on Teacher Retirement, Secretary of the National Conference on Public Employee Retirement Systems, and was elected to the executive board of the Government Finance Officers Association of the United States and Canada; and Whereas, it is self-evident that PERA will be forever indebted to Joe, now therefore, be it Resolved, that with profound gratitude, the Board of Trustees of PERA memorialize Joseph P. Natale for his many contributions and accomplishments during his 20-year career on the PERA executive staff; and Resolved, that the PERA Board and staff extend their sincere condolences to his two children Julie and Kim, his four grandchildren, and six great-grandchildren, and that a copy of this Resolution be presented to the family; and Resolved, that a copy of this Resolution be placed in the official minutes of the September 18, 2015, PERA Board of Trustees meeting. A motion was made by Carole Wright and seconded by Marcus Pennell that the foregoing Resolution be adopted. The motion was approved. Proclamation Mason Parsaye Maryann Motza, Chair, Board of Trustees, asked the Board to consider the following Resolution: Proclamation Concerning Mason Parsaye Whereas, Mason Parsaye served as a Trustee on the Board of the Colorado Public Employees Retirement Association (PERA) from July 2014 through June 2015, and represented the members of the Local Government Division; and Whereas, during his time on the Board, Mason served as a member of the Audit and Compensation and Budget Committees; and Whereas, Mason participated in all PERA meetings and will be remembered for his ability to ask thoughtful and detailed questions thereby earning respect from his colleagues; and

6 Page 6 of 10 Whereas, Mason embodied the highest qualities of a Trustee and earned the admiration and esteem of the PERA Board members and staff; and Whereas, Mason s term on the Board of Trustees of PERA ended in June 2015 due to his retirement, now therefore, be it Resolved, that with the highest level of appreciation and congratulations, the Board of Trustees of PERA formally recognize and thank Mason Parsaye for his service to the membership of PERA during his time as a member of the Board of Trustees, and wish him well as he leaves the PERA Board and enters retirement; and Resolved, that a copy of this Resolution be placed in the official minutes of the September 18, 2015, PERA Board of Trustees meeting. A motion was made by Carolyn Jonas-Morrison and seconded by Amy Nichols the foregoing Resolution be adopted. The motion was approved. Executive Committee Report Carolyn Jonas-Morrison, Board Vice-Chair, reported that the Executive Committee met on Friday, June 19, 2015, and approved the February 28, 2015, March 31, 2015, and April 30, 2015, Unaudited Financial Statements and the March 31, 2015, April 30, 2015, May 31, 2015, Budget Reports. In addition, the Committee met on Wednesday, August 12, 2015, and reviewed the proposed September Board Planning Session schedules and the Agenda and recommended changes to both the planning schedule and Board Meeting Agenda. The Executive Committee also met on Tuesday, September 15, 2015, and approved the May 31, 2015, June 30, 2015, and July 31, 2015, Unaudited Financial Statements and the June 30, 2015, July 31, 2015, August 31, 2015, Budget Reports. Finally, they reviewed the final September Board Planning Session schedules and the Agenda. Economic Outlook Jennifer Paquette, PERA Chief Investment Officer, introduced Maury Harris, Chief Economist, UBS. Dr. Harris provided his perspective of the market and economic outlook. The presentation was transmitted to Trustees as Tab J on September 11, Dr. Harris responded to questions. Investment Committee Report Jennifer Paquette, PERA Chief Investment Officer, introduced, John J. Lee, Partner - U.S. West Region Aon Hewitt Investment Consulting, Inc. and Amy McGarrity, PERA Deputy Chief Investment Officer. Mr. Lee and Ms. McGarrity provided comments and information regarding the process of researching the opportunity to invest in hedge funds within PERA s Opportunity Fund. In addition, they discussed information from the June 22, 2015, Investment Committee meeting, which was transmitted to Trustees as

7 Page 7 of 10 Tabs S1 and S2 on September 14, Ms. McGarrity responded to questions and discussion ensued. In addition, Ms. McGarrity provided an explanation PERA s Opportunity Fund and responded to questions. Susan Murphy moved that the Investment Committee recommends that, the Board of Trustees approve the addition of global macro and multi-strategy relative value hedge funds as allowable investments within the Opportunity Fund. Within the Opportunity Fund, the foregoing strategies together may not comprise more than 40 percent of the Opportunity Fund allocation. The motion passed with one nay vote cast by Karl Fisch. The Board recessed at 10:04 a.m. and reconvened at 10:25 a.m. Governance Manual Review Discussion Karl Paulson, PERA Director Planning, Policy & Budget, introduced Tom Iannucci, President, Cortex Applied Research, Inc. Mr. Paulson, Maryann Motza, Chair, Board of Trustees?, and Gregory W. Smith, PERA Executive Director, provided information regarding the draft timeline, which was transmitted to Trustees as Tab R2 on September 10, A motion was made by Maryann Motza and seconded by Scott Noller that stated, the Board of Trustees approve the Governance Manual Review Schedule dated September 18, 2015, as presented in Tab R2 The motion passed. Mr. Iannucci provided information regarding PERA s Governance Manual. The presentation was transmitted to Trustees as Tab R4 on September 10, Mr. Iannucci also provided information regarding the proposed changes to the Board Education Policy, which was transmitted as Tab R3. A motion was made by Carole Wright and seconded by Scott Noller that stated, the Board accept the changes as amended in Tab R3 of the Board meeting materials. The motion passed with one nay vote cast by Lynn Turner. The Board recessed at 11:33 a.m. and reconvened at 11:50 a.m. Susan Murphy left the meeting at 11:50 a.m. Staff Reports Executive Director Report Gregory W. Smith, PERA Executive Director, reviewed the Executive Director Report and recent activities. This information was transmitted to Trustees as Tab K on September 4, 2015.

8 Page 8 of 10 Market & Portfolio Update Jennifer Paquette, PERA Chief Investment Officer, provided a market and portfolio update presentation. The Investment Performance Report was transmitted to Trustees as Tab L on September 4, General Counsel Update Adam Franklin, PERA General Counsel, provided a staff update regarding the departure of Kimberly Gardner, Senior Staff Attorney. In addition, Mr. Franklin reported on administrative error corrections pursuant to C.R.S (6)(b). Mr. Franklin requested that the Board go into Closed Executive Session. The issues to be discussed involved pending or imminent litigation and specific legal questions addressed to the General Counsel regarding the following: Settlements Securities Litigation Colorado PERA and trust funds et al. v. BP, PLC et al. Trustees of the Mineworkers Pension Scheme Limited, et al. v. The Royal Bank of Scotland Group, PLC Disability Cases Hogan v. PERA et al. Tribune Class Action Lyondell Chemical Company Bankruptcy Janet Walcott v. PERA, Gregory W. Smith, and Brian Pippin Elham Salemi v. PERA, Tim Moore, and Angela Setter Romstad et al. v. City of Colorado Springs Maryann Motza, Chair, Board of Trustees, polled the Trustees in attendance and received consent to go into Closed Executive Session at 12:37 p.m. The issues to be discussed involved pending or imminent litigation and specific legal questions addressed to legal counsel. In addition to the Trustees, the Executive Director and the General Counsel, all the Chief Officers, the Public Information Officer, the Director of Planning, Policy, and Budget, the Director of Communications and External Affairs, and the Manager of the Executive Director s Office, participated in the Closed Executive Session. The Closed Executive Session concluded at 1:00 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. Maryann Motza, Chair, Board of Trustees

9 Page 9 of 10 Northern Trust Risk Report Amy McGarrity, PERA Deputy Chief Investment Officer, introduced Martha Argo, PERA Investment Director, James Haran, Vice President, Northern Trust, and Jeff Powers, Second Vice President, Northern Trust, who provided a report regarding PERA s portfolio risk. This information was transmitted to Trustees as Tab M on September 4, Susan Murphy rejoined the meeting via conference call at 1:17 p.m. Investment Consultant Search Susan Murphy, Chair, Ad Hoc Committee Investment Consultant RFP, asked that Amy Grant assist in providing an update regarding the process and progress of the investment consultant search. In addition, Jennifer Paquette, PERA Chief Investment Officer, reported that the recommendation for the finalist will be presented at the January 2016 Board meeting. Information regarding this item was transmitted to Trustees as Tab N on September 4, Executive Director Performance Report Gregory W. Smith, PERA Executive Director, presented the Executive Director Performance Report related to Operations Management. This report was transmitted to Trustees as Tab O on September 4, Rules Discussion Adam Franklin, PERA General Counsel, introduced Kimberly Gardner, PERA Senior Staff Attorney, and Megan Westberg, PERA Staff Attorney. Ms. Gardner and Ms. Westberg provided a presentation that reviewed the proposed changes to the PERA Rules. This information was transmitted to Trustees as Tab P on September 4, A motion was made by Carolyn Jonas-Morrison and seconded by Roger Johnson that stated, the Board direct staff to proceed with the statutorily required rulemaking process regarding the topics discussed today and attached as Tab P in the meeting materials. The motion was approved. Walker Stapleton left the meeting at 2:15 p.m. and did not return. Jon Forbes took his place at the meeting.

10 Page 10 of 10 Actuarial Assumption Workshop Discussion Gregory W. Smith, PERA Executive Director, provided information regarding the process to provide an actuarial assumption workshop. A motion was made by Carole Wright and seconded by Marcus Pennell that stated, the Board of Trustees not conduct an Actuarial Assumption Workshop that would impact the 2015 CAFR. Scott Noller offered a friendly amendment to include or benefits administration during Ms. Wright and Mr. Pennell accepted the amendment. The chair called for a roll call vote of the motion, as amended, with the following results: Maryann Motza, No; Carolyn Jonas-Morrison, No; Richard Delk, Yes; Karl Fisch, Yes; Jon Forbes, No; Roger Johnson, Yes; Susan Murphy No; Amy Nichols, Yes; Scott Noller, Yes; Marcus Pennell, Yes; Lynn Turner, No. Carole Wright, Yes. The motion passed. The Board was in consensus for staff and the Board s consultants to conduct an educational actuarial assumption workshop at the November board meeting. Other Business Gregory W. Smith, PERA Executive Director, provided an update on the progress of the Ad Hoc Committee Board Vacancy and responded to questions. Other Business Amy Nichols asked for an item to be added to the next Board meeting agenda related to decorum policy. The Board was in consensus to add this discussion to the November 20, 2015, Board Meeting Agenda. With no further business to discuss, Maryann Motza, Chair, Board of Trustees, adjourned the meeting at 2:50 p.m. Board Meeting Dates November (19) 20, 2015 Maryann Motza, Chair, Board of Trustees Respectfully submitted by Brenda E. Meidl Manager of the Executive Director s Office Gregory W. Smith, Executive Director Approval Date: November 20, 2015