Current Info

PUBLIC EMPLOYEES' RETIREMENT
EDUCATION SESSION AND MEETING MINUTES FOR
Tuesday, July 15, 2003 and Wednesday, July 16, 2003

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 3:00 p.m., Tuesday, July 15, 2003 in PERS' Board Room, 5820 S. Eastern, Suite 220, Las Vegas. Members present: Charles Silvestri, Sue DeFrancesco, Mark Balen, David Kallas, George Stevens and Warren Wish. Members absent: Purisimo Hernandez.

JULY 15, 2003

Chairman Silvestri welcomed George Stevens to the PERS' Retirement Board. Mr. Stevens was appointed by the Governor to replace Marvin Leavitt

INVESTMENTS

1. Staff reviewed the fundamentals of Real Estate Investment Trusts (REITs) and how they are utilized by pension plans.

ADMINISTRATION

1. Staff discussed the different types of actuarial assumptions and how they impact and relate to experience studies performed by PERS' actuary, The Segal Company.

QUESTIONS AND ANSWERS
RECESS - Chairman Silvestri recessed the meeting at 4:25 p.m.

JULY 16, 2003

The regular monthly meeting of the Public Employees' Retirement Board was called to order at 8:00 a.m., July 16, 2003, in the PERS' Board Room, 5820 S. Eastern, Suite 220, Las Vegas. Members present: Charles Silvestri, Sue DeFrancesco, Mark Balen, David Kallas, George Stevens, Warren Wish, and Purisimo Hernandez (via telephone). Members absent: None.

INVESTMENTS

1. Staff reviewed PERS' real estate program, including performance and asset allocation issues.

2. Staff presented background information and reviewed previous board meeting discussions on the L&B Realty Advisors portfolio. A letter from Andy Smith, L&B Realty Advisors was also provided. Staff mentioned that a meeting has been scheduled with L&B for July 21, 2003.

3. Kevin Johnson, Paul Michaels, and David Ridley of Invesco Realty Advisors presented their annual real estate portfolio reviews for their separate and takeover accounts.

4. Dan Boone and Paul Marshall of Atlanta Capital Management presented an update on their U.S. growth equity portfolio and compared their market forecasts from last year to actual results.

5. Jim Chambliss and Karen Jakobi of Pathway Capital Management presented their annual alternative investment portfolio review.

6. Staff presented a portfolio summary report on the PERS', Legislators' and Judicial funds.

7. Staff highlighted the proposed changes to the Interim Investment Directives for the PERS' fund. On motion of Mark Balen, the Board voted unanimously to approve the Interim Investment Directives, PERS' fund, as submitted.

BOARD

1. On motion of Sue DeFrancesco, the Board voted unanimously to re-elect Charles Silvestri Chairman of the Retirement Board. On motion of Mark Balen, the Board voted unanimously to re-elect Sue DeFrancesco Vice-Chairman of the Retirement Board.

2. Sue DeFrancesco reviewed the report and recommendations from the Retirement Board Subcommittee determining the process for recruitment and selection of PERS' Executive Officer. On motion of David Kallas, the Board voted unanimously to adopt the following process recommended by the Subcommittee for recruitment and selection of PERS' Executive Officer:

1. Nationwide announcement in trade publications (i.e. Wall-Street Journal, Pensions & Investments), professional organizations (NASRA, NCTR) and local newspapers.

2. Applications to be reviewed for compliance with the requirements of NRS 286.160(3).

3. The Chairman re-appointed the Subcommittee to narrow the candidate pool by utilizing a rubric/grading grid, to not more than 6 for interview by the full Board.

4. Subcommittee will meet on August 21, 2003, in Las Vegas to determine finalists for interview.

5. Finalists will be named at the September 25, 2003 Board meeting.

6. Interviews and selection of an Executive Officer will take place at the October 22, 2003 Board meeting in Las Vegas.

3. Staff presented the annual executive staff performance review for fiscal year 2003 highlighting accomplishments in the following performance measurement areas: Executive Management, Operations, Investment Program, Legislative Program Management, Actuarial Management, Public Relations, and Board Relations. On motion of Warren Wish, the Board voted unanimously to accept the Executive Staff Annual Performance Review, as submitted.

4. On motion of David Kallas, the Board voted unanimously to approve the minutes of the Retirement Board meeting held June 17, 2003, as submitted.

5. On motion of Mark Balen, the Board voted unanimously to approve the Retirement Board meeting dates for January 2004 through June 2004, as submitted.

6. There were no changes to the Retirement Board meeting dates for the remainder of 2003.

ACCOUNTING

1. A. Staff reviewed the changes in the approved budget from what staff had requested for the 2004-2005 biennium. Staff is working with the Department of Administration on certain expenditures related to personnel.

ADMINISTRATION

1. For the record, Warren Wish declared he knows Sharon Love. On motion of Mark Balen, the Board voted unanimously to:

1. Approve permanent and total disability retirement for: David Austin, Lana Bates, Bonnie Bell, Patricia Brower, Debbie Fite, Denise Humphrey, Nancy Hunter, Kristi Komisar, Lawrence Larsen, Paula Levene, Sharon Love, Joan Martin, Mari Mitchell, William Pruett, Julie Shimunek, Keith Van Horn, and Norman Young.

2. Approve reemployment requests by disability recipients: Lona Domenici-Reese, Charles Henn, Lawrence McDowell, David McNeill, Richard Peklo, Janet Pervanger, Diane Raucher, Lewis Rosenberg, and Maryde Scherf.

2. Chairman Silvestri opened the hearing on PERS' official policy additions under extra-duty assignments and lump sum payments of compensation. Staff reviewed the additions. Chairman Silvestri called for public comment and none was offered. On motion of Sue DeFrancesco, the Board voted 5-yeas and 2-nos, to adopt the proposed policies as submitted and directed staff to complete the requirements of NRS 286.200. Mark Balen and David Kallas voted no.

3. Staff reviewed the minutes and recommendations from the Police and Firemen's Retirement Fund Advisory Committee meeting held June 24, 2003. On motion of Mark Balen, the Board voted unanimously of those present, to approve the minutes and recommendations of the Police and Firemen's Retirement Fund Advisory Committee meeting held on June 24, 2003. David Kallas was not present for this vote.

4. The Deputy Attorney General reported that there were no changes on the two pending cases involving PERS.

5. There were no individual statements and/or requests by the members, retired employees and/or the public.

6. Administrative Report by Staff

Operations Officer:

Dana Bilyeu stated that the website has been receiving approximately 3,000 hits per week, which is up from 800. She will provide additional statistics when they are available.

Dana also reported the statistics for the Las Vegas office, which is receiving more counseling appointments and more walk-ins than the Carson City office.

Investment Officer:

Laura Wallace mentioned that she has been appointed by the Governor to serve on the State Deferred Compensation Board.

The August Education session will include an expanded discussion on asset allocation.

Retirement Board questions and/or comments offered.

Charles Silvestri

Asked how the September Seminar meeting plans were going. Staff has arranged for two economic speakers and is coordinating panel discussions. Dana Bilyeu and Laura Wallace will open the program with a discussion on contribution rates and liabilities.

David Kallas

Requested that the Retirement Board Members' phone list include members of the Executive Staff.

Requested the topic of brokerage commissions be placed on a future agenda for further discussion.

Sue DeFrancesco

Asked that staff review/research land development real estate strategies for discussion at a future board meeting.

Requested that staff review the managers that have been terminated in the last two years and provide performance returns.

Mark Balen

On behalf of the Board, Mr. Balen volunteered to collect Board member donations to purchase a retirement gift for George Pyne from the Retirement Board.

LEGISLATION
Senate Bill 345 of the 2003 legislative session requires the Retirement System to request an opinion from the Internal Revenue Service regarding taxability of the PERS' disability benefit. Staff has contacted David Powell of the Groom Law Group in Washington, D.C., the law firm already handling other Internal Revenue issues for the System, for a review of the provisions of SB 345. Mr. Powell estimates legal fees to obtain the opinion to be approximately $12,500 to $17,500. In addition to the costs for legal representation, the IRS requires a filing fee of $6,000.00. On motion of Mark Balen, the Board voted unanimously to authorize staff to engage The Groom Law Group for purposes of obtaining a determination from the IRS on whether PERS' disability benefits paid pursuant to chapter 286 of the NRS are excludable from taxable income and other matters pertaining thereto.

Senate Bill 447 of the 2003 legislative session relates to the creation of a collateral pool within the Nevada State Treasurer's Office for collateralizing governmental bank accounts. The Board has taken a neutral position on this bill as it was stated in the record that the bill did not apply to PERS. It is staff's understanding that this bill may be reintroduced during the special session. To date it has not been reintroduced.

There were no legislative matters that developed after publication of the agenda.

RATIFICATION AGENDA

On motion of Mark Balen, the Board voted unanimously to:

1. Approve the Administrative Fund disbursements.

2. Approve personnel action taken since the last report.

3. Approve out-of-state travel for appropriate staff and Board members to attend the National Association of State Retirement Administrators' (NASRA) annual conference being held in Monterey, California, August 1-6, 2003.

4. This item was removed from the ratification agenda for separate consideration.

5. Approve Investment Performance Guidelines with Invesco Realty Advisors, Mortgage Portfolio and Nye Lane Property.

6. Approve the Benefit Payment Audit report for March 2003.

7. Approve the Final Benefit Audit report for March 2002.

8. Staff reviewed the University Medical Center's request for a penalty waiver in the amount of $769.50 for late submittal of January 2003 contributions. Mr. Stevens requested clarification on penalty waivers. On motion of David Kallas, the Board voted 6-yeas and 1-abstension, to approve the University Medical Center's request for a penalty waiver in the amount of $769.50 for late submittal of January 2003 contributions. Mr. Stevens abstained from the vote.

APPEALS

1. A. Staff presented background information regarding the appeal of Isophine Atkinson for beneficiary benefits from the account of deceased retiree Bobbie J. Atkinson who retired from the System in September 1997. At the time Mrs. Atkinson retired, she selected the Unmodified Option, which provides the maximum benefit to the retiree, but no benefit to a beneficiary in the event of the retiree's death.

   Mrs. Atkinson passed away on September 2, 2002. Her family is requesting that PERS pay benefits to Bobbie J. Atkinson's daughter, Isophine Atkinson based on medical documentation indicating that Bobbie J. Atkinson was diagnosed as having primary dementia, probably Alzheimer's disease in November 1997.

   Dietra Atkinson appeared before the Board on behalf of her sister, Isophine Atkinson and stated that she did not believe that her mother, Bobbie J. Atkinson understood the implications of choosing Option 1 when she retired. She further stated that her mother was forgetful. Ms. Atkinson also referred the Board to Dr. Boulware's letter dated January 26, 2003, stating that he saw Bobbie J. Atkinson in November 1997 and diagnosed Bobbie J. Atkinson with having primary dementia, probably Alzheimer's disease.

   The Deputy Attorney General reminded the Board that substantial information must be presented to determine that an error or inequity occurred at the time of Mrs. Bobbie J. Atkinson retirement.

   For the record Mr. George Stevens stated that he would abstain from voting on this item because of personal knowledge regarding Ms. Atkinson. On motion of Sue DeFrancesco, the Board voted 4-yeas, 2-nos, 1-abstention, to deny the request of Isophine Atkinson that PERS provide a benefit to her under the account of deceased retiree Bobbie J. Atkinson. Warren Wish and David Kallas voted no.

DENIALS
REPORTS

The following is the time schedule for the meeting:

The July 16, 2003, Board meeting was called to order at 8:00 a.m. At approximately 9:55 a ten-minute break was taken. The meeting was recessed for lunch at 12:05 and was called back to order at 1:00 p.m. On motion of Mark Balen the meeting was closed at 1:03 p.m. for consideration of disability matters and reopened on motion of Sue DeFrancesco at 1:10 p.m. The meeting adjourned at 2:55 p.m.