Current Info

Current Info

June 2002 Minutes

These minutes are a draft subject to approval by the Retirement Board at their next regular meeting.

PUBLIC EMPLOYEES' RETIREMENT BOARD EDUCATION SESSION and REGULAR MONTHLY BOARD MEETING MINUTES
Thursday, June 20, 2002 and Friday, June 21, 2002
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The agenda for this meeting was mailed to every public employer, the news media, and other groups and individuals as requested.

The education session of the Public Employees' Retirement Board was called to order by Board Chairman Charles Silvestri at 3:10 p.m., June 20, 2002 in the PERS' Conference Room, 693 West Nye Lane, Carson City. Members present: Charles Silvestri, Earl Greene, Warren Wish, Andy Anderson, Sue DeFrancesco and Purisimo Hernandez. Members absent: Marvin Leavitt.

June 20, 2002
Education Session

I. INVESTMENTS

Staff reviewed the alternative investment portfolio and the investment criteria utilized by PERS' investment manager, Pathway Capital Management.

II. ADMINISTRATION

Staff highlighted the custodian services offered by Bank of New York and the commercial services available through Wells Fargo Bank. Staff also reviewed the request for proposal process PERS follows every 5 years for banking services in accordance with NRS 286.680(6).

III. QUESTIONS AND ANSWERS

IV. RECESS

Chairman Silvestri recessed the meeting at 4:35 p.m.

June 21, 2002
Retirement Board Meeting

The regular monthly meeting of the Public Employees' Retirement Board was called to order at 8:00 a.m., June 21, 2002, in the PERS Conference Room, 693 West Nye Lane, Carson City. Members present: Charles Silvestri, Earl Greene, Andy Anderson, Sue DeFrancesco, Purisimo Hernandez, Warren Wish and Marvin Leavitt. Members absent: None.

I. INVESTMENTS

Staff reviewed the annual performance of the real estate program and highlighted the suggested modifications to the Real Estate Reporting Guidelines. On motion of Andy Anderson, the Board voted unanimously to approve the Real Estate Reporting Guidelines, as submitted.

Stacie Crown, Daniel Plumlee, and Andy Smith, L&B Realty Advisors, presented their annual portfolio review, an organization overview, and L&B's outlook for the real estate market in the upcoming year.

Paul Michaels and David Ridley of Invesco Realty Advisors, reviewed their portfolio performance, organization, investment management process and philosophy.

Jeff Cavanaugh, Loretta Culhane, Doug Engelman, and Jim McWalters, PMRealty Advisors, discussed the status of their ownership, portfolio performance, and the outlook for the portfolio for the upcoming year. PMRealty will provide monthly updates on the progress of the ownership change and their performance.

Callan and Staff reviewed the candidate selection process for an active core U.S. fixed income mandate. Five finalists were selected from a database of approximately 225 bond products, which were ranked by risk/return performance criteria and screened for assets under management. On motion of Earl Greene, the Board voted unanimously to invite, Banc One Investment Advisors, Smith Breeden Associates, and Western Asset Management to the Board's July 16, 2002, meeting for interviews in conjunction with an active core U.S. fixed income mandate.

Staff presented recommended changes to the Interim Investment Directives, PERS' fund. On motion of Sue DeFrancesco, the Board voted unanimously to approve the Interim Investment Directives, PERS' fund, as submitted.

II. BOARD

Mary Pistoresi, PERS' Principal Auditor, highlighted the findings and responses from the July 2000 Benefit Audit. On motion of Marvin Leavitt, the Board voted unanimously, to accept the July 2000 Benefit Audit, as submitted.
Mary Pistoresi, PERS' Principal Auditor, presented the findings and responses from the quarterly Benefit Payment (Death) Audits for December 2001, and March 2002. On motion of Purisimo Hernandez, the Board voted unanimously to approve the quarterly Benefit Payment (Death) audits for December 2001 and March 2002, as submitted.

On motion of Sue DeFrancesco, the Board voted unanimously to approve the minutes of the Retirement Board Sub-Committee on Executive Officer Performance Evaluation Process meeting held May 15, 2002, as submitted.

On motion of Earl Greene, the Board voted unanimously to approve the minutes of the regular Retirement Board education session and meeting held May 14, and May 15, 2002, as submitted.

Staff reviewed the Executive Officer Performance Evaluation form developed by staff and the Retirement Board Sub-Committee. Staff highlighted the seven performance categories and key benchmarks established to measure the goals and objectives within those categories. Sue DeFranceso thanked the sub-committee and staff for their assistance on this project and stated it went very smoothly. On motion of Sue DeFrancesco, the Board voted unanimously to approve the Executive Officer Performance Evaluation form, as submitted, with the understanding that the Agreement between the Retirement Board and the Executive Officer be updated to include the seventh performance category.

There were no recommended changes to the Retirement Board meeting dates.

III. ACCOUNTING

Ann Schleich, Chief Accountant, presented the proposed fiscal 2004-2005 biennial budget. The final budget will be presented at the July 2002, meeting.

IV. ADMINISTRATION

On motion of Purisimo Hernandez, the Board voted unanimously to:
1. Approve total and permanent disability retirement for: Robert Becker, Terence Bohl, Leon Borden, Ethel Burks, Nathan Byers, Judith Caplinger-White, Isis Cheda, Carson Clelland, Lona Domenici-Reese, Richard Gonzales, William Gray, Michael Hodge, Bettye Keeton, Launa McCollum, Karolyn Nartker, Judy Naylor, Dina Parra, Joani Pauls, Jann Reizner, Gloria Rhynes, Bonnie Ross, Mary Sullivan, Nancy Thomas, and Darrell Wilson.
2. Approve reemployment requests by disability recipients: James Benthin, Sherry Freer, and Katherine Gilbert.
Staff presented the Draft Study Report on Lump Sum Optional Retirement Programs which included the different types of programs offered by other state systems, the study procedure, survey responses, survey and research findings, analysis of lump sum optional retirement programs for Nevada, and conclusions and recommendations. Analysis by the System's actuary, The Segal Company, was also included in the conclusions and recommendations section. Discussion ensued on DROPs (Deferred Retirement Option Plan) versus PLOPs (Partial Lump sum Optional Plan). On motion of Andy Anderson, the Board voted unanimously to approve the Draft Study Report on Lump Sum Optional Retirement Programs without the proposed recommendations. The study recommendations will be reconsidered at the July 2002 meeting.
Staff reviewed the Letter of Intent from Covansys to upgrade PERS' optical imaging system from Filepower to Acorde. On motion of Sue DeFrancesco, the Board voted unanimously of those present, to approve the Letter of Intent between Covansys and PERS for the upgrade of the optical imaging system from Filepower to Acorde upon successful negotiations. Andy Anderson was absent for this vote.
The Deputy Attorney General had nothing to report.
Individual statements and/or requests by the members, retired employees, and/or the public.
1. Michele Mettner, University Community College System, asked if the lump sum optional program pay outs could be put in a tax sheltered annuity on behalf of the employee to avoid tax implications. If yes, what types of annuities would be allowed? Ms. Mettner also asked where the PERS' contributions would be coming from during the DROP or PLOP period.
2. Rusty McAllister, Professional Fire Fighters Association of Nevada, questioned whether employee associations could provide recommendations to the Retirement Board on which lump sum optional program they would like to see implemented at PERS.
3. Ron Dreher, Peace Officers Research Association of Nevada, echoed Mr. McAllister's request to allow employee associations to provide comments to the Retirement Board as to what lump sum optional program they would like to see implemented.
Administrative Report by Staff:
Executive Officer:
1. Executive Officer, George Pyne, spoke at the annual RPEN meeting in Pahrump on June 12, 2002. The meeting was well attended by approximately 100 retired public employees.
2. Staff informed the Board that the U.S. Senate Banking Committee is introducing legislation for accounting reform in light of Enron. Staff was contacted by the director of CalPERS to contact Senator Ensign who sits on the committee to support the legislation. Staff spoke with Senator Ensign's staff and was informed the Senator will be offering some amendments to the bill.
3. Staff discussed IRC 401(a)(9), which limits the amount of benefits paid to a beneficiary.
Operations Officer:
1. Staff announced that Member Statements now include a benefit estimate. We are in the processes of printing and distributing the annual statements, which also includes the single survivor beneficiary information.
2. Covansys is currently working on the design and build phase of the E-Carson web project.
3. Holly Zimmerman will present an update at the July 2002, meeting on the progress of our communications initiative.
Investments Officer:
1. The Investment Officer and the Assistant Investment Officer spoke at the Hugh O'Brian Youth conference in Las Vegas last week. Their presentation was very well received.
Questions and/or comments by members of the Retirement Board.
1. On behalf of staff and the Retirement Board, Chairman Silvestri thanked Ann Schleich for her dedication and commitment to PERS during her first 10 years of service and presented her with a plaque commemorating her achievement.
2. Warren Wish mentioned he read an article in the CPRS newsletter that AARP was in favor of mandatory Social Security coverage for newly hired state and local government employees and asked if PERS could speak out against such mandatory coverage. PERS is on record as being opposed to mandatory Social Security coverage and staff will continue to work in opposition.
3. Warren Wish also stated that in the past he was a business partner with David Morgan but no longer has any financial interest in that business.
4. Charles Silvestri asked staff to explain brokerage payments. This item will be scheduled for an upcoming Board education session.

V. LEGISLATION

Staff presented a list of items for actuarial cost studies in preparation of the 2003, legislative session. In addition to staff's recommendation, a request from PORAN (Peace Officers Research Association of Nevada), the Police and Firemen's Retirement Fund Advisory Committee and RPEN (Retired Public Employees of Nevada) have been included in the list. On motion of Marvin Leavitt, the Board voted unanimously to approve the following items for actuarial cost studies in preparation for the 2003, legislative session:

Plan Amendment
1. 25 years retirement at any age - regular members
2. 20 years retirement at age 55 - regular members
3. 2.75% of average compensation - regular and police/fire members
4. 3% of average compensation - regular and police/fire members
5. 2.70% of average compensation for both regular and police/fire members
6. Allowing a retired member whose spouse predeceases him to provide income protection to a new spouse for up to 2-years after the retired member's death
7. Allowing early retirement coverage to all Nevada peace officers
8. Allowing non-sworn police officer cadet time to be credited for early retirement on a retroactive basis
9. Removing the 2-year requirement for promotional coverage in the Police/Fire fund if an out-of-state hire was a law enforcement officer in another state
10. Revise the reduction for retirement at an early age from the lesser of the member's age (current practice) or years of service needed to receive an unreduced benefit. For example, this proposal would change a reduction of 28% (7 years from age 60 X 4%) for a regular member with 29 years of service at age 53 to 4% (1 year from 30 years of service )
11. Revise average compensation from highest consecutive 36 months to highest consecutive 12 months
  
  /OL>
Post-Retirement Increases
1. 2% after 1 year (instead of 3 years), present provision thereafter
2. 3% after 1 year (instead of 6 years), present provision thereafter
3. 75% of CPI beginning in the first year and each year thereafter (assume 4% and 5% inflation)
4. 4% for all years
5. 6% for all years
6. .5% after the first and second year, present provision thereafter
7. 1% after the first and second year, present provision thereafter
  
  Provide for a lump sum $50.00 or $100.00 a month increase for retirees that retired prior to January 1, 1989 and receive less than $750.00 per month.
VI. RATIFICATION AGENDA

On motion of Sue DeFrancesco, the Board voted unanimously to approve the Ratification Agenda as follows:
1. Approve Administrative Fund disbursements.
2. Approve personnel action taken since the last meeting.
3. Approved retroactive approval of the Investment Management Agreement and Investment Performance Guidelines with Mellon Bond Associates, effective May 15, 2002.
4. Approved the Independent Contractor Contract with David Morgan-Nevada Video Productions, for the production of two videos at a cost not to exceed $9,200.00.
5. Approved the Independent Contract with Employees Company of Nevada, Inc. for temporary staff for the period of July 1, 2002, through June 30, 2003, at a cost not to exceed $25,000.00.
6. Approved Pershing County - Grass Valley Volunteer Fire Department's request for membership in PERS, effective July 1, 2002.
7. Approved the Independent Contract with Intraforms, Inc. for the printing of approximately 8,000 inactive member statements for fiscal year 2002.
VI. APPEALS
Chairman Silvestri explained the appeal process to Mr. and Mrs. Clifton. Staff presented background information on Mr. and Mrs. Clifton's request to revert back to disability retirement from their current service retirement. In 1999, Mr. and Mrs. Clifton voluntarily elected to change from disability retirement to regular service retirement. By electing service retirement, PERS' coding on their 1099-R form changed from a (3) to (7) in reporting their earnings to the IRS. According to the Conversion Authorization form both Mr. and Mrs. Clifton signed, this conversion is permanent and one cannot return to a disability retirement once the conversion becomes effective.
Based on NRS 286.620, staff has denied the Clifton's request for disability retirement as they do not meet the requirements provided in the statute.
Mr. Clifton addressed the Board and requested the code on their 1099-R be changed back to a (3) as they have lost the IRS disability tax deduction.
The Deputy Attorney General stated she did not feel the Board had authority to change Mr. and Mrs. Clifton's records, as they do not meet the requirements of NRS 286.620. She further stated she did not see an error or omission under NRS 286.190(3)(4), on the part of PERS' staff so the Board does not have authority to approve Mr. and Mrs. Clifton's request.
Warren Wish asked the Deputy Attorney General if PERS should put a statement on the conversion form regarding possible tax implications. The Deputy Attorney General stated that PERS is not allowed to give advice on tax matters as we are not experts in that field and are limited to retirement matters.
On motion of Marvin Leavitt, the Board voted 6-yes and 1-no, Andy Anderson voting no, to deny the request by Richard and Constance Clifton to be converted from service retirement to disability retirement effective June 22, 1999, as they do not meet the statutory requirements for disability retirement.

VIII. DENIALS

IX. REPORTS
The following is the time schedule for the meeting:
June 20, 2002, the education session was called to order at 3:10 p.m. and recessed by Chairman Silvestri at 4:35 p.m. The June 21, 2002, meeting was called to order at 8:00 a.m. At 9:45 a.m. and 10:50 a.m. a break was taken for approximately 5 minutes. The meeting was recessed at 11:55 a.m. until 1:10 p.m. at which time the meeting was called to order. On motion of Earl Greene the meeting was closed for consideration of disability matters at 1:10 p.m. and opened at 1:35 p.m. by motion of Andy Anderson. At 2:55 p.m. a break was taken for approximately 5 minutes. The meeting adjourned at 3:53 p.m.