Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, August 25, 2016, at 2:00 PM, in Room 154 of the Capitol Annex. Senator Christian McDaniel, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Christian McDaniel, Co-Chair; Representative Rick Rand, Co-Chair; Senators Ralph Alvarado, Danny Carroll, Denise Harper Angel, Stan Humphries, Brandon Smith, Stephen West, and Max Wise; Representatives Linda Belcher, John Carney, Larry Clark, Mike Denham, Jeffery Donohue, Myron Dossett, Brad Montell, Marie Rader, Sal Santoro, Rita Smart, Jim Stewart III, Wilson Stone, Tommy Turner, Addia Wuchner, and Jill York.
Guests: Rob Richards, Deputy Commissioner, Department of Parks, Bill Novak, Director, Division of Facilities Management; David Eager, Interim Executive Director, Kentucky Retirement Systems, David Peden, Chief Investment Officer, Kentucky Retirement Systems.
LRC Staff: Jennifer Hays, Charlotte Quarles, Eric Kennedy, and Jennifer Beeler.
Approval of the Minutes
Senator Alvarado made a motion, seconded by Representative Donohue, to approve the minutes of the August 1, 2016 meeting. The motion carried by voice vote.
Testimony Regarding Kentucky Retirement Systems Investment Returns
David Peden, Chief Information Office and David Eagen, Interim Executive Director of the Kentucky Retirement Systems, gave a very detailed overview of Kentucky’s investment performance.
Mr. Peden explained that the investment performance is a product of asset allocation and manager selection. The board’s policies establish asset allocation targets based on asset-liability modeling studies that are conducted by independent experts at least once every five years. The objective of the asset allocation policies is to produce returns that meet certain benchmarks or goals, both on a short-term and long-term basis. To meet its objectives, the investment program employs diversification and rebalancing strategies among and within the asset classes.
Mr. Peden presented several very detailed graphs and projection worksheets explaining the state’s investment portfolio for the pension and insurance plans. The graphs showed all investments and the returns. There were several more graphs that showed performance drivers for investments, investment returns, risk and return analyses for both five and ten years, and a review of cash flow for the system.
Discussion on State Park Renovations
Rob Richards, Deputy Commissioner and Bill Novak, Director, Division of Facilities Management, discussed the $18 million state investment that was given to the state parks.
Mr. Richards explained that the $18 million allocation was the largest investment that has been given to state parks in over 10 years. These funds are being used to improve exteriors this year. In 2015, a $5.8 million investment was used for updating the interior of some of the lodges.
He stated that, over the last year, several parks have reflected the effects of deferred maintenance. The funds allocated have already been used for aesthetic and safety upgrades. He gave an overview of the scheduled parks’ upgrades, which include extensive exterior repairs over the next 18 months.
Mr. Richards explained that, as a result of the upgrades to the state parks, customers can book reservations online through different travel sites. Internet and Wi-Fi access is improving across the facilities. There are also alcohol sales within 11 of the state parks. Finally, state parks plan to take advantage of the opportunity provided by the recently enacted public private partnership (P-3) legislation.
With no further business, the meeting was adjourned.