Current Info

PUBLIC EMPLOYEES' RETIREMENT
EDUCATION SESSION AND MEETING MINUTES FOR
Tuesday and Wednesday, December 16-17, 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., December 16, 2003 and the Board meeting at 8:00 a.m. on December 17, 2003, in the PERS' Board Room, 693 West Nye Lane, Carson City. Members present: Charles Silvestri, Sue DeFrancesco, Mark Balen, Purisimo Hernandez, David Kallas, George Stevens, and Warren Wish. Members absent: None.

1. INVESTMENTS

1. Staff discussed the S&P 500 Index and index management.

2. ADMINISTRATION

1. Staff discussed the process and timeline for completing the fiscal year 2003 external audited financial statements.

3. QUESTION AND ANSWERS

4. RECESS

   Chairman Silvestri recessed the meeting at 4:20 p.m.

1. INVESTMENTS

1. Mellon Capital, Merrill Lynch Investment Managers, and State Street Global Advisors interviewed for S&P 500 Index fund mandates. On motion of Warren Wish, the Board voted 6-yeas and 1-no to retain Mellon Capital to manage an S&P 500 Index fund for PERS. David Kallas voted no. On motion of Mark Balen the Board voted 6-yeas and 1-no to retain Merrill Lynch Investment Managers to manage an S&P 500 Index fund for PERS. George Stevens voted no.

2. Staff, Jamie Shen, and Paul Troup of Callan Associates, discussed Real Estate Investment Trusts (REITs) and the benefits associated with having a dedicated REIT allocation in the alternative investment portfolio. On motion of David Kallas, the Board voted unanimously to approve an alternative investment portfolio structure of 50% private real estate, 30% REITs, and 20% private equity. On motion of David Kallas the Board voted unanimously to authorize staff to identify candidates qualified to replicate the performance of the Wilshire REIT Index.

3. Staff presented the proposed amendments to the Investment Objectives and Policies for the PERS' fund. On motion of George Stevens, the Board voted unanimously to approve the Investment Objectives and Policies, PERS' fund as submitted.

4. Staff reviewed the proposed changes to the Investment Objectives and Policies for the Legislators' and Judicial funds. On motion of Mark Balen the Board voted unanimously to approve the Investment Objectives and Policies for the Legislators' and Judicial funds, as submitted.

5. Staff presented the 2003 Assets Under Management report for the PERS', Legislators', and Judicial funds.

6. Staff reviewed modifications to the Interim Investment Directives, for the PERS' fund. On motion of Purisimo Hernandez, the Board voted unanimously to approve the Interim Investment Directives for the PERS' fund as amended.

2. BOARD

1. On motion of Mark Balen the Board voted unanimously to approve the minutes of the Retirement Board's special meeting held November 12, 2003, as submitted.

2. On motion of George Stevens, the Board voted unanimously to approve the minutes of the Retirement Board education session and meeting held November 18-19, 2003, as submitted.

3. Staff presented the fiscal year 2004 internal audit management plan. On motion of Mark Balen, the Retirement Board voted unanimously of those present, to approve the fiscal year 2004 internal audit management plan, as submitted. David Kallas was not present for this vote.

4. There were no changes to the Retirement Board Education Curriculum calendar.

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

3. ACCOUNTING

1. Staff reviewed the fiscal year 2003 audited financial statements; management letters; and staff responses for the Public Employees' Retirement System, the Legislators' Retirement System, and the Judicial Retirement System as prepared by PricewaterhouseCoopers. On motion of Mark Balen, the Board voted unanimously of those present, to accept the fiscal year 2003 audited financial statements; management letters; and staff responses for the Public Employees' Retirement System, the Legislators' Retirement System, and the Judicial Retirement System as submitted. David Kallas was not present for this vote.

4. ADMINISTRATION

1. For the record Warren Wish stated he had a professional relationship with Patricia Granier, which would not preclude him from voting. On motion of Mark Balen, the Board voted unanimously of those present to:

1. Approve permanent and total disability retirement for: Horace Carter, Monica Corral, Patricia Granier, Mary Lou Guebara, Marvie Johnson, Virginia Limasa, Mary McCoy, Milton Presley, Sara Riley, William Smith, Sherry Vincent, Linda Waller, and Steven Werner.

2. Approve reemployment requests for disability recipients: Maureen Cauley-Hughes, Gregory Lee, and Stuart Miller.

David Kallas was not present for this vote.

2. Action was deferred on the purchase of service tables and optional benefit factors.

3. Staff reviewed additional language added to PERS' Official Policy 11.35 to help clarify the terminology as requested during the policy hearing at the November meeting.

4. Staff presented the minutes and recommendations of the Police and Firefighters' Retirement Fund Advisory Committee meeting held November 20, 2003. On motion of Sue DeFrancesco, the Board voted unanimously of those present to approve the minutes and recommendations of the Police and Firefighters' Retirement Fund Advisory Committee meeting held November 20, 2003 as submitted. David Kallas was not present for this vote.

5. RATIFICATION AGENDA

   On motion of Mark Balen, the Board voted unanimously to approve the Ratification Agenda as follows:

1. Approve the Administrative Fund disbursements.

2. Approve the personnel action taken since the last report.

3. Approve out-of-state travel for the Executive Officer to attend the 2004 NASRA Winter Administrators meeting in Washington, D.C. February 7-11, 2004.

4. Retroactively approve the Performance Expectations Agreement between the Retirement Board and PERS' Executive Officer effective October 29, 2003.

5. Approve the amendment to Barclays Global Investors' Investment Management Agreement with the PERS' fund and U.S. bond index Investment Performance Guidelines.

6. Rescind the termination of Barclays Global Investors' Investment Management Agreement with the Legislators' Retirement System dated May 18, 2001 and approve the Amended Fee Agreement and U.S. bond index Investment Performance Guidelines.

7. Rescind the termination of Barclays Global Investors' Investment Management Agreement with the Judicial Retirement System dated June 20, 2001 and approve the Amended Fee Agreement and U.S. bond index Investment Performance Guidelines.

8. Approve the Software Maintenance Agreement (SWA) and System Support Agreement (SSA) with ATI, Inc. for the period of January 1, 2004 through December 31, 2004, for the amounts not to exceed $30,710 for the SWA and $2,000 for the SSA.

9. Approve the Final Benefit Audit Reports for October 2002, November 2002, and December 2002.

10. Approve the Fiscal Year 2003 Internal Management Plan versus Actual Year-End Report.

6. APPEALS

1. Staff presented background information on the request by the City of Reno and the Reno Police Protective Association for the Retirement Board to review a decision by PERS' former Executive Officer regarding a settlement award between the City of Reno and the Reno Police Protective Association. The settlement award involved payment to officers who were in a special assignment where the work schedule required a 10-hour workday. During the period of the assignment beginning March 6, 1995 and ending March 1, 1998, the officers were only paid for a 9-hour workday. The payment specified in the settlement award was overtime pay. The System's Deputy Attorney General reviewed the settlement award and determined the monies paid based on the award did not meet the definition of compensation under NRS 286.025 and, as such, were not subject to contribution to PERS.
   David Ford, representing the Reno Police Protective Association, contends that the pay awarded in the settlement is compensation and should be subject to contribution to PERS based on a handwritten notation at the bottom of the final paragraph of the settlement award. This notation states, "…is a salary adjustment, PERS compensable." The author of this handwritten notation is not documented. Mr. Ford continued that based on this notation, the Board has the authority to determine that an error or inequity has occurred under NRS 286.190 and determine that the settlement was a salary adjustment and not overtime pay.
   Don Christiansen, representing the City of Reno, disagrees with Mr. Ford stating that the settlement award is payment for overtime worked and thus is not compensation contributable under PERS. The settlement agreement was negotiated for overtime pay as stated in the agreement. It was never considered a salary adjustment.
   The Deputy Attorney General directed the Board to NRS 286.025 which states what compensation is and that if the term does not include any type of payment specifically described under this statute it is not considered compensation. Overtime pay is excluded from the definition of compensation and therefore not contributable under PERS. This settlement agreement specifically states it is for overtime pay.
   After discussion, on motion of George Stevens, the Board voted 4-yeas and 1-no to support the decision of PERS' former Executive Officer related to the settlement award between the City of Reno and the Reno Police Protective Association. Mark Balen voted no. David Kallas and Sue DeFrancesco were not present for this vote.

7. DENIALS

8. REPORTS

Staff reviewed the new Member, Employer, & Retiree Relations Report that includes the number of phone calls, counseling appointments, walk-ins, and informational programs that were provided by PERS' staff in the previous month by both the Carson City office and the Las Vegas office.

9. COMMENTS

1. There was nothing to report by the Deputy Attorney General.

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

3. Administrative report by Staff.

   Executive Officer:

   1. Staff announced that PERS has received a ruling from the IRS on disability benefit payments that states these payments are not excludable from taxation. Staff will move forward with the disability study and look at other disability programs across the country and the cost of these programs. After reviewing the information staff will prepare a report for the Board to review prior to submitting the final report to the Legislative Commission as directed by SB 345 of the 2003 legislative session.

   2. Staff informed the Board that on the last day of the Federal legislative session HR 763 was passed that contained a provision for employers who participate in a state retirement system must present a form to each new employee prior to their first day of employment, that tells the employee at the time of their retirement their Social Security may be reduced by the Government Pension Offset and/or the Windfall Elimination Provision, by participating in a state retirement system pension.

   3. PERS is working with PEBP to assist them in the implementation of the provisions of their Assembly Bill 286. PEBP has requested an AG opinion of the bill but have not received it yet. Staff will keep the Board informed.

   4. Applications for the Operations Officer will be accepted through December 18th. To date we have received 59 applicants. Interviews will be conducted approximately the second week in January with a recommendation coming before the Board at the January 21, 2004 meeting.

   5. On behalf of all of PERS' staff, the Executive Officer wished the Board a very Happy Holiday Season.

4. Questions and/or comments by members of the Retirement Board.

   1. Chairman Silvestri, on behalf of all the Board members, wished the entire PERS' staff a wonderful holiday season.

The following is the time schedule for the meeting:

On December 16, 2003, the Education Session was called to order at 3:00 p.m. by Chairman Charles Silvestri and recessed at 4:20 p.m. The December 17, 2003, Board meeting was called to order at 8:00 a.m. A break was taken at 9:25 a.m., 10:40 a.m., 11:30 a.m., and 1:00 p.m. for approximately 5 minutes each time. The meeting was recessed at 12:25 a.m. for lunch and reconvened at 12:45 p.m. On motion of Purisimo Hernandez the meeting was closed for consideration of disability retirements at 1:10 p.m. and opened at 1:17 p.m. on motion of George Stevens. The meeting adjourned at 1:55 p.m.