Current Info

PUBLIC EMPLOYEES' RETIREMENT
BOARD EDUCATION SESSION AND MEETING MINUTES FOR
Tuesday, June 15 and Wednesday, June 16, 2004

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., June 15, 2004, in the PERS' Board Room, 693 West Nye Lane, Carson City. Members present: Charles Silvestri, Sue DeFrancesco, Mark Balen, Purisimo Hernandez, George Stevens, and Warren Wish. Members absent: David Kallas.

1. INVESTMENTS

1. Staff discussed brokerage commission recapture and soft dollar programs. Staff also reviewed PERS' brokerage policies.

2. ADMINISTRATION

1. Staff presented a brief history of PERS' contribution plans and how PERS evolved to its current contribution plans.

3. QUESTION AND ANSWERS
4. PUBLIC COMMENT
5. RECESS
Chairman Silvestri recessed the meeting at 4:15 p.m.

The Board meeting of the Public Employees' Retirement Board was called to order by Board Chairman Charles Silvestri at 8:00 a.m., June 16, 2004, in the PERS' Board Room, 693 West Nye Lane, Carson City. Members present: Charles Silvestri, Sue DeFrancesco, Mark Balen, Purisimo Hernandez, George Stevens, and Warren Wish. Members absent: David Kallas.

1. DISABILITIES

1. On motion of Mark Balen, the Board voted unanimously of those present to:

1. Approve permanent and total disability retirement for: Cherylyn Allen, Anne Crielly, Virginia Dolan, Gloria Dondero-Pedro, Richard Gagnebin, Christel Gustavis, Richard Hansen, Robert Jackson, Sandra Jamerson, Jill Johnson, Carl Lobsien, Judith Mikolainis, Melinda Monahan, Angela Ross, Jerilyn Sorkness, Elizabeth Spencer, Brook Wiegand, and Lucinda Zoccole.

2. Approve reemployment requests by disability recipients: Janice Carmody, Gerald Jackson, Richard Resnik, Norma Rice, Linda Spezia, and David Young.

2. INVESTMENTS

1. Jim Chambliss and Karen Jakobi of Pathway Capital Management presented an organizational overview, reviewed Pathway's philosophy and investment process, and presented an annual review of PERS' private equity portfolio.

2. Dick Graf and David Kroon of WestAM reviewed their organization, addressed WestAM's investment process, performance of PERS' Lehman Aggregate Index portfolio, and discussed the evolution of the U.S. bond market.

3. Corin Frost and Andy Gabel of Barclays Global Investors presented an update on their S&P 500 Index and Wilshire REIT Index portfolios for the PERS' fund and updates on the Lehman Aggregate Index portfolios for the PERS', Legislators', and Judicial funds.

4. Staff presented an update on the progress of the U.S. growth stock manager search. Further discussion will take place on this item at the July Board meeting. No action was taken on this item.

5. Staff reviewed the proposed modifications to the Alternative Investment Reporting Guidelines. On motion of Mark Balen, the Board voted unanimously of those present, to approve the Alternative Investment Reporting Guidelines, as submitted.

6. Staff presented the proposed modifications to the Interim Investment Directives for the PERS' fund. On motion of Warren Wish, the Board voted unanimously of those present, to approve the Interim Investment Directives, PERS' fund, as submitted.

3. BOARD

1. Staff presented the proposed modifications to the Retirement Board Duties, Policies, and Procedures for Section V, Funding. After discussion, the Board directed staff and PERS' actuary to project estimated 2004 contribution costs by adding 5-years to the current amortization period and converting the current closed amortization to an open amortization period for discussion at the July Board meeting. No action was taken on this item.

2. Staff reviewed the proposed Independent Contract with Cortex Applied Research, Inc. to review the Retirement System's governance structure and policies. On motion of Mark Balen, the Board voted unanimously of those present, to authorize staff to contract with Cortex Applied Research, Inc. for governance service, subject to successful negotiation and at a cost not to exceed $85,000.00, including expenses.

3. On motion of Warren Wish, the Board voted unanimously of those present, to approve the minutes of the Retirement Board education session and meeting held May 11 and 12, 2004, as submitted.

4. On motion of Sue DeFrancesco, the Board voted unanimously of those present to change the October meeting dates to Wednesday, October 20th for the education session and Thursday, October 21st for the Board meeting.

5. The Retirement Board requested staff add the investment manager search process to the current education curriculum calendar for discussion.

4. ACCOUNTING

1. Tina Leiss, Operations Officer and Ann Schleich, PERS' Chief Accountant, reviewed the proposed Fiscal Years 2006-2007 biennial budget for PERS. A final budget will be presented to the Board at the July meeting for approval. The Retirement Board requested a review of non-classified salaries for the July meeting.

5. ADMINISTRATION

1. Staff presented the proposed changes to PERS' Official Policies 6.6 and 11.34 regarding purchase of service factors. Chairman Silvestri opened the public hearing on the policy changes. No public comments were offered. On motion of Mark Balen, the Board voted unanimously of those present to approve the proposed additions and revisions to PERS' Official Policies 6.6 and 11.34 (purchase of service), as submitted.

2. Staff reviewed highlights from PERS' first annual liaison conference that was held on May 25, 2004, at the Atlantis Hotel and Casino in Reno. There were 167 attendees representing 93 public employers at the conference. Next year's liaison officer conference will be held in Las Vegas.

6. LEGISLATION

1. Staff presented the final report on Senate Bill 345 of the 2003 Legislative Session regarding review of PERS' disability program. Upon evaluation of other state pension disability programs and five different models prepared by The Segal Company, staff recommends no changes to the current disability program. Staff stated that the proposed models could create a cost to the System and could be seen as a benefit enhancement to a very small number of members instead of benefiting the majority of PERS' members. On motion of Warren Wish, the Board voted unanimously of those present, to approve the final report on Senate Bill 345 with no recommended changes to PERS' disability program and directed staff to submit the report to the Legislative Commission no later than July 1, 2004.

2. Staff reviewed the proposed actuarial cost studies for The Segal Company to perform in preparation for the 2005 Legislative Session. On motion of Mark Balen, the Board voted unanimously of those present to approve the proposed actuarial cost studies for the 2005 Legislative Session.

7. RATIFICATION AGENDA

On motion of Sue DeFrancesco, the Board voted unanimously of those present to approve the Ratification Agenda as follows:

1. Approve the Administrative Fund disbursements.

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

3. Retroactively approve out-of-state travel for appropriate staff and Board members to attend the National Conference on Public Employee Retirement Systems (NCPERS) annual conference April 30th through May 6th, 2004 in Anaheim, California.

4. Approve out-of-state travel for appropriate staff and Board members to attend the National Association of State Retirement Administrators (NASRA) annual conference August 6th through August 11th, 2004 in Asheville, North Carolina.

5. Approve out-of-state travel for investment staff to visit Invesco Realty Advisors' Dallas office.

6. Retroactively approve the amended Fee Exhibit and Investment Performance Guidelines with Barclays Global Investors for a Wilshire REIT Index mandate.

7. Approve an Independent Contract with Employees' Company of Nevada, Inc. for the period of July 1, 2004 through June 30, 2005, at a cost not to exceed $31,320.

8. Approve the Housing Authority of the City of Las Vegas' request for a penalty waiver in the amount of $538.81.

9. Retroactively approve the Investment Management Agreement and REIT Investment Performance Guidelines with Invesco Reality Advisors.

8. DENIALS
9. REPORTS
10. COMMENTS

1. Danny Coyle, President, AFSCME, addressed the Board regarding the disability program study and stated that he wished the Board had made a recommendation for change. On a different matter, Mr. Coyle mentioned that he received a letter from PEBP stating there was a discrepancy in the amount of service credit he reported and the amount PERS reported regarding calculating his insurance subsidy. In order to continue to receive his insurance subsidy, he needs PERS to perform an audit on his service credit and return the form to PEBP. The Executive Officer explained to the Board that PERS became aware of these letters just last week by a retiree that came into the office with a copy of the letter. Staff is working overtime to accommodate all the requests from its retirees. PERS' was told there were approximately 4,000 of these audit letters distributed by PEBP.

2. The Deputy Attorney General had nothing to report.

3. Administrative Report by Staff:

   Executive Officer:

   1. The Executive Officer mentioned that there was in article in the Pension and Investments magazine about the SEC making inquiries with actuarial firms. The Segal Company, PERS' actuary, has complied with the inquiry and is not under investigation.

   2. The Executive Officer reported that she will be participating in an RPEN panel discussion on June 23rd in Las Vegas.

   3. The Executive Officer announced that she will be speaking at the July meeting of the Washoe Chapter of Retired State Employees.

   Operations Officer:

   1. The Operations Officer reported that staff is working on another overtime project which is completing purchase of service estimates for the 1/5 of a year purchase for at risk school teachers. PERS has received approximately 2,400 requests.

   2. The Operations Officer mentioned that PERS' new phone system is being installed which should provide more lines, shorter waiting times on hold, and fewer service disruptions.

   3. PERS' disaster recovery site has some hardware installed and PERS' is currently testing the system. Replication of PERS' current software is underway with a goal for completion of the site by the end of this year.

   4. The Operations Officer thanked Kathi Quilici, Management Analyst, for all her hard work in planning and coordinating PERS' 1st annual liaison officer conference. Tina also thanked all staff that made presentations at the conference, as it was a huge success.

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

   Charles Silvestri

   1. Charles Silvestri thanked both WestAM and Barclays Global Investors on behalf of the Board, for their long-term relationships with PERS and looked forward to many more years together.

   2. Charles Silvestri asked staff if PERS could consider increasing the average compensation amount that a retiree could earn once they return to work without losing their benefit. Staff will research this and bring information to the July Board meeting.

The following is the time schedule for the meeting:

On June 15, 2004, the Education Session was called to order at 3:05 p.m. by Chairman Charles Silvestri and recessed at 4:15 p.m. The June 16, 2004, Board meeting was called to order at 8:00 a.m. On motion of Mark Balen, the meeting was closed for consideration of disability retirements at 8:00 a.m. and opened at 8:05 a.m. on motion of Mark Balen. Two breaks were taken at 9:15 and 10:40 for approximately 10 minutes each. The meeting was recessed at 11:50 a.m. for lunch and reconvened at 12:15 p.m. One break was taken at 1:15 p.m. for approximately 5 minutes. The meeting was adjourned at 2:10 p.m.