Call to Order and Roll Call
The meeting of the Public Pension Oversight Board was held on Monday, January 26, 2015, at 1:00 PM, in Room 154 of the Capitol Annex. Representative Brent Yonts, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Joe Bowen, Co-Chair; Representative Brent Yonts, Co-Chair; Senators Jimmy Higdon and Gerald A. Neal; Representative Brian Linder; Robyn Bender, Tom Bennett, Jane Driskell, James M. "Mac" Jefferson, Sharon Mattingly, and Alison Stemler.
Guests:
Representative Arnold Simpson; Representative Derrick Graham; Dolores Morris, Cora LePorin, LaNoma Banks, Kathleen Wright, and Daniel Flaherty, members of Kentucky Employees Retirement Systems; Lowell Reese, Kentucky Roll Call; Debbie Wesslund and Dan Anderson, Kentucky School Boards Association; and Beau Barnes, Kentucky Teachers Retirement Systems, among others.
LRC Staff: Brad Gross, Bo Cracraft, Terrance Sullivan, Greg Woosley, and Marlene Rutherford.
Approval of December 15, 2014, Minutes
Co-Chair Bowen moved that the minutes be approved. Mr. Jefferson seconded, and the minutes were approved without objection.
Kentucky Retirement Systems Investment Update
David Peden, Chief Investment Officer, provided the December investment update. He said in the aggregate the portfolio for down 92 basis points for December and 98 basis points for the fiscal year. He provided the fiscal year numbers to date for each individual pension system. The KERS nonhazardous plan is down 61 basis points, which is right on top of the benchmark, while the KERS hazardous plan is down 1.17 percent, which is slightly under the benchmark that is down 79 basis points. The CERS nonhazardous plan is down 1.07 percent, which is below the negative 75 basis points of the benchmark, while the CERS hazardous plan is down 1.05 percent versus its benchmark that was down 75 basis points. The SPRS plan is down 1.08 percent versus its benchmark of 81 basis points. The U.S. equity market in the KRS pension asset allocation is the only positive contributor. The S&P 500 through December was up 6.12 percent. The Russell 3000 used for the U.S. equity benchmark was up 5.25 percent. The KRS U.S. equity portfolio was up 4.22 percent, and KRS is trailing its benchmark mostly because passive investing is outperforming active investing managers in the portfolio and growth is outperforming value managers. The non-U.S. equity class continues to be the biggest drag on the portfolio, and through December the all cap weighted index (ACWI) benchmark was down 8.81 percent. The fixed income allocation is slightly positive for the month, up 58 basis points, versus the benchmark of 1.31 percent, and Mr. Peden noted there is more credit in the portfolio than in the benchmark and interest rate sensitive fixed income is performing better than credit oriented fixed income. He said the second reason for negative return is that the real return portfolio has inflation sensitive assets, which have been affected by the lack of inflation in the U.S., and because there is discussion of the Federal Reserve not increasing rates in 2015 because of the low level of inflation. Therefore, all the assets in the portfolio that are designed to hedge against inflation are not performing well. The absolute return class, or hedge funds, real estate, and private equity, are positive contributors. Mr. Peden said that the asset balance for the KERS nonhazardous plan through December is $2.347 billion. At the last meeting he provided estimated numbers for the employer contribution amounts for the nonhazardous plan, but the actual numbers to date are $322 million, which has exceeded what was contributed in fiscal year 2014. The employee contributions for the plan for the fiscal year to date are $41 million. The contributions to the plan will be about $731 million and the amount being paid out in benefits and expenses has not changed much from the prior fiscal year, which is about $900 million in payout. Mr. Peden indicated that if investment performance is flat and the budgeted numbers stay the same, the shortfall between contributions and benefit payments will be about $168 million, and he noted that the full funding of the actuarially required contribution (ARC) is making a huge difference as compared to prior years.
Bill Thielen, Executive Director of KRS, stated that if there were no investment returns this year and going forward, with the assets KRS has and the contributions at 100 percent of the ARC, KRS can continue to pay benefits in the range of six to seven years. He noted that the asset returns and 100 percent of the ARC contribution are critical.
Responding to questions by Co-Chair Yonts, Mr. Peden said that the $168 million is the amount of assets that would need to be sold to meet the benefit payout obligations because there was not enough money earned to make those payments and that it would not affect the next budget cycle but it will be incorporated in the actuarial analysis and may increase the ARC slightly. The shortfalls in the non-U.S. equity class attributable to recessionary and global concerns is the rise in the dollar, which would be discussed in more detail at the February meeting, but the strengthening of the dollar is negatively impacting the performance of that asset class. He said that the KRS may change its exposure to emerging markets equities, but it would likely not materially change its exposure to the non U.S. equity markets overall.
Mr. Thielen noted that the currency hedging program that KRS had in place a few years ago was designed to hedge against what is occurring currently in the markets, but the program was criticized and the KRS board ultimately ended the program. However, he noted that if the program was still in place the plan assets would be protected from the currency environment that KRS operates in today.
Relating to earlier concerns of staff turnover at KRS, Mr. Peden reported that KRS has hired two new employees who began working the first week in January and that there are two vacancies remaining to be filled. Also, in response to a question by Mr. Jefferson at the last meeting concerning changes in KERS’ asset allocation versus the other retirement systems, he stated that five years ago when the asset allocation modeling study was performed KRS had already made changes so that KERS looked different than the other systems. The KERS nonhazardous plan has no stand-alone exposure to emerging market equity, and although they do have emerging market equity in the ACWI it is not a dedicated four percent target to emerging market equity like the other systems, which is a reduction in risk already in place. In addition, that system has more core fixed income exposure and a higher cash target than the other nine portfolios, which contributes to a lower risk profile and is reflected in the fiscal year to date numbers that are down only 60 basis points versus the other systems that are down more than one percent.
Co-Chair Bowen commented that when the General Assembly returns to session he will be filing a bill, Senate Bill 10, that identifies savings that the state can realize and that it includes language that the savings should be applied directly to the ARC. He encouraged everyone to look at the bill and provide any comments for consideration.
Mr. Thielen noted that KRS had issued a press release regarding posting of investment manager fees by individual investment managers within asset classes, which was provided to the members in their folders, and he said he would be happy to answer any questions the Board may have concerning those fees. He also mentioned the KRS Summary Annual Financial Report received previously in place of the comprehensive report, which has become expensive to produce, that has been posted online. He also stated that the KRS has several studies underway, such as the Asset Liability Modeling Study that is planned to be reported to the KRS board at its May meeting, and that he will bring those results to the PPOB shortly thereafter. A request for proposal (RFP) is in its final stages for an actuarial audit that will be submitted after review by the audit committee and the KRS board in February. The results of that actuarial audit should be completed about the end of May. KRS is in the process of developing a RFP for a study of investment fees and commissions as they relate to other public pension plans nationally, which hopefully will be ready by the end of May as well, and another RFP is being developed that will study the KRS administrative structure and costs relative to other pension plans nationally, with plans for this study to be completed by the end of September. He said a classification and compensation study, and an organizational structure study, were completed in 2012 by a national firm, CBiz Human Resources, and are being updated.
In response to a question by Senator Higdon relating to the management fees, Mr. Peden stated that preferred return is the amount of money needed for a client to get their investment back plus the preferred return prior to a charge of interest or performance fee. The management fee is paid annually, or depending on the asset class, could be paid on committed capital or actual dollars invested with the manager. The performance fee is paid if the fund performs well. If the capital and preferred return is met, the manager keeps $0.20 for every dollar made for the client, which he noted incentivizes the manager to do a better job. Mr. Thielen pointed out that all the fees are consistent with industry standards and are presented to the KRS investment committee and the KRS board when considering the hiring of an investment manager.
Kentucky Teachers’ Retirement System
Gary Harbin, Executive Secretary, and Eric Whopper, Deputy Executive Secretary, of the Kentucky Teachers’ Retirement System, were present.
Co-Chair Yonts indicated that the presentation that the Board would be hearing from the LRC Staff on peer comparisons showed that the investment returns for the KTRS for one year ending June 30, 2014, was 18.1 percent, the three year return was 11.3 percent, the return over five years was 13.7 percent, and performance over the last ten years was 7.2 percent. Co-Chair Yonts also commented that the KTRS is doing well and the $3.3 billion bond issue over the next 30 years that is being considered by the
General Assembly would increase the KTRS funded status from 51 percent to 61 percent. He also said there is a bill dealing with the oversight by the PPOB that was contemplated when the pension task force was in place. The issue was that KERS needed oversight, but the bill did not include oversight of the judicial, legislative, and teachers’ retirement systems in the task force. When the bill was passed that reformed the pensions for KERS the PPOB was created as recommended by the task force. Co-Chair Yonts stated that the PPOB needs the support of KTRS to bring that system into the oversight of the PPOB. Co-Chair Yonts indicated that there is a perception among teachers that they are not a part of state government. Co-Chair Yonts asked Mr. Harbin to relay to KTRS retirees that they are a part of state government and should support the proposed bill to bring the KTRS, judicial, and legislative systems into the oversight of the PPOB.
Mr. Harbin provided the PPOB information on the proposed funding for the 2014-2016 budget and the request of a $3.3 billion bond to stabilize cash flows in the KTRS.
Investment Peer Comparison
LRC staff members, Brad Gross and Bo Cracraft, testified about investment returns of KRS relative to its peers.
Mr. Cracraft indicated that the presentation would cover five topics of discussion. The majority of the presentation would be focused on investment performance relative to peers and a couple of study topics approved as part of the recommendations with regard to investment expense and disclosure, as well as a review of oversight structure and organizational structure of the retirement plans. He discussed the year-end results for the period ending June 30, 2014, and support data used to calculate a median return and asset allocation reflected in the presentation was also provided. He noted that three peer group results were compared, and that since the August meeting the LRC created peer group of state employee plans has increased from 20 to 44 states. In reviewing peer group returns, staff looked at the policy benchmark, which is the targeted weights for each asset class, and that one of the stated goals of KRS and most pension plans are to exceed the return of the policy benchmark. The KRS nonhazardous pension plan portfolio for the one, five, and ten year performance period has matched or exceeded the benchmark return. The insurance portfolio for the nonhazardous plan has a different benchmark target and has performed below the benchmark from an absolute standpoint. The second return target is the assumed actuarial rate assumption of 7.75 percent. This is the rate that is in process of being decreased to 7.5 percent in the future. As of June 30, 2014, in the short term of one to five years, KRS has exceeded the return target; however over the ten year period both the pension and insurance plans have fallen short. Staff also included the KTRS results for the same period and that KTRS exceeded their policy benchmark and the peer group over the one to five year period. He noted that the decade has been difficult for all the peer groups and that neither KRS nor its peers hit the 7.75 percent benchmark over the last ten years.
The presentation included a historic asset allocation for U.S. public pension funds for the last 25 years. During the mid 80s, data showed that pension plans were predominately fixed income and cash focused and the alternative asset class was minimal and consisted primarily of real estate and publicly traded real estate investment trusts (REITs). The historical data reflected that toward the end of the century funds migrated toward a more equity driven portfolio and there was the beginning of a growth in alternative assets that was largely comprised of the early stages of private equity asset placement. In the last five years, equity has been diversified and the 2012 pension and investments study reported an average allocation of about 20 percent to alternative investments and most recently a Cliffwart study reported an average allocation to this asset class of about 25 percent in 2013. As a point of clarification, Mr. Cracraft indicated that reference to alternatives incorporates multiple sub-asset classes and includes public and private real estate, private equity or venture capital partnerships, distressed debt or leverage buyout agreements. He stated that real return is largely inflation protected securities and also includes real assets such as timber or commodities, and that hedge funds represent absolute return. He noted that staff has tried to consistently group state data in the review based on the alternative allocation categories, regardless of the terms used by a particular state plan.
Staff also provided historic asset allocation for the KRS for the last 14 years, and they noted the trend is similar to the industry allocation. For example, at the turn of the century KRS was largely a public equity portfolio with about a quarter of the portfolio in fixed income, whereas holdings in real estate were just under five percent and the remainder was held in cash. However, as with the overall industry, over the last 15 years KRS slowly diversified out of public equity and increased the exposure to alternative assets. Recently KRS has reintroduced real estate to the portfolio and added a dedicated allocation to real return. In 2014, KRS had a 34.5 percent allocation to alternatives.
The average peer group comparison shows that state plans hold about 51 percent in public equity, comprised of both U.S. and non-U.S. equities. KTRS had 63 percent in equity as of June 30, 2014. KRS is also in line with the fixed income and cash compared to its peers, and KTRS is in line with peer groups for fixed income.
Mr. Cracraft noted that deciding how to manage assets will affect the expected return, and that the decision to hold more or less of an asset class affects the total fund return. Public equities have been the strongest performing asset class for KRS over the past five years. However, KRS has taken a different approach by holding less in public equity over the last five years, with an average return of 14 percent per year, and holding more in diversified alternatives, which has earned four percent for the same period. Mr. Cracraft said that plans with higher exposure to equities have outperformed plans invested in other classes. The allocation differences between the top ten and bottom ten funds of the 44 plans based on an average five year return reflected that the top ten funds had an average equity exposure of over 57 percent of the plan, which was above the median fund exposure of 54 percent. Also, the top ten funds had less average allocation in alternatives, at 19.8 percent versus the median of 20.4 percent. The ten funds that performed below the median had an equity exposure of approximately 46.5 percent, and those bottom funds had an overweight to alternative allocations at 29.5 percent - most of which was in an allocation to hedge funds. Six of the bottom ten funds had an allocation to hedge funds with an average weight of six percent, whereas in the top ten funds only three had any exposure to hedge funds and only one had an allocation with an average weight of greater than one percent. He said that KRS from an asset allocation standpoint looks much like the bottom list of managers and the average returns are similar. He pointed out that KTRS had an allocation to equity of about 63 percent at the end of the fiscal year and an allocation to alternatives of 12 percent and their asset allocations are more in line with the top ten portfolios.
Mr. Cracraft indicated that asset allocation and comparison to a policy benchmark is driven through the process of an asset liability modeling study, which is normally done about every five years by third party consultants and coincides with the experience study when evaluating the assumptions. The study not only looks at assets of a plan or the expected returns of a particular asset class, but also tries to match the pension assets relative to the liabilities that the benefits are generating. It incorporates expected capital market return of each of the asset classes and incorporates the volatility expected. The output is that the KRS board and investment committee then generates policy portfolios with an expected return and an expected risk that they believe are most efficient mixes of assets to get to a targeted return of 7.75 percent (or 7.5 percent going forward) and to best match the liability stream generated on the benefit side. Asset allocations are important decisions because on average 90 percent of a plan’s total return is driven by the asset allocation each fiscal year. One of the difficulties KRS or KTRS faces when doing an asset liability modeling study is dealing with the pressure of what is occurring in today’s markets. For example, the peer comparison asset liability study for the fiscal year ending June 30, 2008, was a negative 4.2 percent and showed that the median fund had less equity and more alternatives, with the diversification to alternatives providing stability. However, for the period ending June 30, 2014, the median fund reflected more assets in equity with less in alternatives, with U. S. equities being the strongest and most stable asset class. Mr. Gross noted that some of the data was discussed during the public pension workgroup in 2008 and there was an investment consultant hired by the workgroup, and that at the time one of the things they noted was that KRS and KTRS had less exposure to alternatives and the conclusion was that the plans needed to be more diversified in alternatives moving forward.
Mr. Cracraft stated that for the period ending June 30, 2014, the returns were improved at a positive 15.6 percent, and the average five year return was at 12.0 percent versus the 8.5 percent in 2008. This shows that what was working in 2008 is not working currently. The plans that have more equity, and specifically U.S. equity, are outperforming those plans that have less exposure to this asset class, and the asset class has had low volatility compared to its historical average. Also notable is that alternatives provided a downside protection in 2008, but those same assets are now dragging down overall performance because the asset class is underperforming the public equity markets. He noted that it is difficult to project or plan asset decisions for ten or 20 years without looking at what is occurring in the market and that it is difficult to avoid the short term pressures to make adjustments.
The summary on peer comparison investment data shows that KRS appears to have taken a different approach as to how assets are allocated. There is an underweight of public equity and a higher allocation to alternative assets compared to the larger peer group, and based on the large peer group performance comparison this approach has resulted in a head wind because of the strong equity market returns. The other question posed to staff was whether there are other plans in the peer group that are investing similar to KRS. Mr. Craycraft said there were nine plans in the peer group that were not identical but very similar to the asset allocation chosen by KRS. The ten plans, including Kentucky, have a healthy allocation to hedge funds, with an average weight of 10.7 percent, as well as to private equity, real return, and real estate. The ten plans have an average allocation to equity of 41.3 percent and to fixed income at 19.7 percent, which is also in line with KRS. The average returns of the ten plans for one year is 16.1 percent and the ten year average is at 7.0 percent, which is slightly higher than Kentucky’s net return of 15.6 percent for one year and 6.8 percent for 10 years and is within a tolerable range. The average return over the last ten years for this peer group has been 7.0 percent, and only three of the ten groups have met the target over the ten year period, with the returns of two groups, Louisiana and West Virginia, being primarily explained by an equity exposure of about 55.0 percent. Therefore, when compared to plans taking a similar approach as KRS, the returns are in line with the other peer groups although slightly under performing.
In response to questions by Mr. Jefferson with respect to the ten peer groups and what the funded status looks like in those plans, Mr. Cracraft indicated he could not answer that question today but it is an item that will be incorporated in future study. Mr. Jefferson applauded the information provided as being very beneficial and helpful. The information provided in the asset liability study will lead the KRS investment committee and the trustees to select an asset allocation. He said that many times the asset allocation has to fit meeting the liabilities so the funded status of those liabilities has a significant impact on the asset allocation decision, and he was curious as to whether Louisiana or Massachusetts has a similar funded status as Kentucky. Mr. Cracraft indicated that staff would begin working on obtaining that information and bring it back to the PPOB at a future meeting. Mr. Gross noted that prior to the 2010 asset liability modeling study there was a consistent allocation across all funds and in 2010 KRS began to deviate specifically in the nonhazardous pension fund. He said in this next asset liability modeling study it is likely that the KERS nonhazardous fund will continue to deviate from the other funds largely because of cash flow needs and liquidity.
Co-Chair Bowen, expanding on questions and comments by Mr. Jefferson, suggested that any research include not only the unfunded liability of those states but what they used for their benchmark or goal as well as the cash flow situation currently and whether those states have the same challenges as Kentucky is facing.
Mr. Cracraft discussed investment expenses in fiscal year 2014 and disclosure of those expenses, contracts, and agreements. The total investment expense of KRS as reported on the Comprehensive Annual Financial Report (CAFR) was $46.3 million, which equates to 40 basis points of the total fund. KTRS during the same period reported a total fee of 22 basis points, which equates to $37.2 million. In using the same LRC peer group for 33 funds, the median expense for the peer group was 36 basis points, slightly below KRS, and the average was just under one-half percent at 45 basis points, or slightly above KRS. Mr. Cracraft noted that fees can be misleading depending on the manner fees are reported and/or analyzed. For example, global equity is the highest amount of fees as a percent by dollar amount, but as a percent of assets the average fee for global equity is 24 basis points, whereas for real estate the fees by dollar amount appears lower, but the average fee as a percent of assets is 99 basis points. Mr. Cracraft said that for this reason comparing CAFRs for expense data is not ideal. He said that the Governmental Accounting Standards Board (GASB) requires that plans include an investment expense and changes of net assets that all states do include, but that GASB is not clear on what should be included and how it is included. In comparing investment expenses, there are direct and indirect costs and not all plans report the indirect costs in the financial statements, which makes it difficult in comparing expenses. The direct expenses are expenses invoiced directly to the retirement system and a check is written to pay the manager fee. The indirect costs are those expenses that are not invoiced directly but the expense is either capitalized in the value of the investment or netted against income or against the distribution. Also, the internal investment staffing and administrative expenses are not consistently reported by states. Kentucky does not include investment staff expense in its reporting.
Another area staff discussed that has been mentioned previously is how much disclosure KRS provides relative to their peer group. Mr. Cracraft said that GASB is clear that investment expense must be incorporated into the CAFR, but GASB does not state at what level that data is required to be provided. The majority of the peer groups report by asset class, but many report by manager and some provide a total amount. Mr. Cracraft said that KRS reports consistently with the majority of plans by asset class, but he noted that more plans are beginning to incorporate manager level data, including KTRS. KRS is also beginning to disclose investment fees on the KRS website, and he noted that the rates reported are the maximum that would be paid, but not necessarily the actual fees paid by KRS.
LRC staff is making reasonable efforts to identify the states that have disclosures on holdings, fees, and commissions publicly available without going through a formal process to obtain the information, but so far they were unable to find any investment manager contracts.
Mr. Gross indicated there has been discussion among states about disclosure and how much information should be provided, particularly as it relates to alternative investments. 2015 House Bill 49 would require KRS, KTRS, and JFRS to disclose holdings, fees, and commissions by manager and would make contracts available upon request and online. He said there has also been discussion in North Carolina about two competing proposals with varying levels of disclosure, one being pushed by employee groups and the other a proposal being supported by the state auditor. One of the proposals would require all direct and indirect fee disclosure by a manager, the other would require additional reporting and an external review of the investments once every four years, with some disclosure provided to the state auditor of public accounts and the legislature upon request. However, he noted that no bills have passed in North Carolina to date.
Responding to a question by Mr. Jefferson relating to direct and indirect expenses and what is included and not included in Kentucky’s forty basis points total investment expense, Mr. Cracraft stated the forty basis points figure includes all investment manager fees, such strategy fees, consulting fees, custody fees, software packages, data agreements, etc. He also said it is his understanding after talking with KRS staff that they have attempted to go back and add back private equity type fees to the disclosures.
Mr. Cracraft discussed the investment structure for the broader peer group for the 50 state plans by evaluating the organizing statutes, investment policies, etc. Mr. Gross stated that the investment structure is a focus the PPOB requested for review in 2015. There are four categories, and all fifty plans fall into these categories or basic models. The integrated model, the most common model, includes KRS and KTRS. In this model there is a single fiduciary board with responsibility for investment and benefit administration delegated through an executive director or secretary, or a position similar to a CEO. The second most common model is the segregated investment model with two separate entities with their own fiduciary boards. One board is responsible for oversight of the investment of the pension assets and the other board is responsible for benefit oversight. Another model is the single fiduciary board with a separate investment function, which is similar to the integrated model but delegates the investment and benefit functions separately to a chief investment officer and executive director who report independently to a board. He noted that only five states function under this model. The fourth model is the sole fiduciary, which is least common, and is where the responsibility of the investments and benefits are vested in an elected or appointed state official such as a treasurer or comptroller.
Mr. Cracraft indicated that both KRS and KTRS have an integrated model for handling investments. In comparing the two systems, KRS has thirteen trustees, of which six are appointed by the Governor appointed, six are elected by the membership, one is ex-officio, and two of the appointed trustees are required by statute to have ten years of investment experience that is defined by statute. The investment committee is comprised of five trustees, with three appointed by the KRS board chair and two trustees that are required to have investment experience. KTRS has nine trustees, with seven elected by its members and two ex-officio. There are no statutory qualifications for the trustees, and the system’s investment committee consists of five trustees appointed by the board and two non-voting external investment advisors.
In reviewing the investment structure for performance, Mr. Cracraft identified three broad categories to consider. One was the model used, another was the board’s level of expertise, and the third was the value placed on the people involved in the process or the stability of the plan. In reviewing the ten states with higher ten year returns and the ten states with lower ten year returns, the similar structures yield different results. The segregated or single entity separated approach appears more successful and the most common structure or integrated structure is the least successful. He noted that based on the results the only two states using the sole fiduciary model are at the bottom of the ten states reviewed. Continuity of leadership is important and in a sole fiduciary model elections can result in turnover that may impact performance.
Mr. Cracraft stated that states have taken different approaches as to how they have built their boards and that of the 46 states that have a fiduciary board responsible for oversight of investments, 39 states have a board that is largely appointed or ex-officio and Kentucky falls into this category. About half of the 46 states have statutory language that places some level of requirement on a minimum of investment expertise. In comparing the states of Montana, South Dakota, and Colorado as to language contained in their statutes for expertise, he noted that South Dakota has the least amount of detail in their statute, but it is one of the better performing funds and has been for a long period of time. Conversely, Montana has more detail and requires more expertise in the board composition statutes, but it is at the bottom of the states reviewed for fund returns. He said there were some states that incorporate an independent investment council or advisory committee, which would include a mix of trustees and external non-member individuals with voting and non-voting members that participate on the board, similar to the structure KTRS has adopted. He said states are trying different compositions to incorporate some level of expertise on the board to assist in their decisions.
Mr. Cracraft indicated that continuity and stability in an organization is important. Using Indiana as an example, he noted that a few years ago the state consolidated the employee and teachers’ staff retirement systems into one system and in the process created turnover at the staff level and the ten year returns reflected that instability. Similarly, over the last ten years KRS has had four leadership changes and has had recent departure of investment professions, and the transition process can impact performance.
Co-Chair Yonts summarized House and Senate bills that have been filed in the 2015 Regular Session relating to retirement. He announced that the Board’s next meeting would be February 23.
There being no further business, the meeting adjourned at about 2:45 p.m.
A copy of the PowerPoint presentation used by Mr. Cracraft and Mr. Gross is on file in the Legislative Research Commission Library.