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From YouTube: Public Pension Oversight Board (10-25-22)
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C
A
We
do
have
a
quorum,
and
so
we
will
proceed
and
entertain
a
motion
for
approval
of
the
minutes.
From
our
last
meeting
we
have
a
motion
and
a
second
all
in
favor
signify
by
saying
aye
opposed
the
eyes.
Have
it.
Thank
you
very
much.
Our
first
presenter
today
as
Bo
Craycraft
executive
director
judicial
Forum,
Retirement
System,
both
the
floors
you
yours,
identify
yourself
for
the
record.
Please
proceed.
D
Good
afternoon
my
name
is
Beau
Craycraft
and
I'm,
the
executive
director
of
judicial
Forum
retirement
system,
and
it's
a
honored
to
be
here
today.
I
appreciate
your
all's
time.
I'm
here,
I
was
asked
just
to
provide
a
quick
investment
update
as
of
the
first
quarter
of
the
recently
started
fiscal
year
2023
so
just
three
months
in
and
so
with
that
I'll
get
started
with.
My
first
slide
is
just
a
review
of
performance
and,
in
short,
the
first.
D
What
we
saw
in
the
first
quarter
was
a
bit
of
a
continuation
of
what
we
had
experienced
in
the
final
quarter
of
the
prior
fiscal
year,
not
quite
as
significant.
In
the
second
quarter
of
2022
we
saw
assets
declined
pretty
sharply.
S
P
500
was
down
a
little
over
15
percent,
just
in
that
three-month
period,
ending
June
30..
D
For
the
you
know
the
start
of
the
fiscal
year
July
we
saw
a
bit
of
a
little
bright
spot
markets
bounced
back
in
July,
but
in
August
and
September
we
saw
that
exuberance
turn
pretty
quickly
and
so
for
the
quarter.
You
can
see
that
our
assets
were
down
3.3
percent,
that
slightly
exceeded
the
Benchmark
return
of
4.2.
D
Looking
at
it
the
one
year,
you
can
see
that
13.3
to
13.7,
depending
on
the
tier
of
assets
and
pretty
much
in
line
with
the
benchmark.
D
Not
surprisingly,
you
know
just
as
a
reminder
we're
70,
Equity,
30
short
term,
mostly
high-end
corporate,
fixed
income,
and
so
you
know
we
we
expect
some
volatility.
D
Looking
longer
term,
you
can
see,
we
believe
over
a
market
cycle
of
10
to
20
years.
You
know,
holding
a
portfolio
of
large
strong
companies
with
strong
leadership
will
perform
will
provide
excess
returns.
So
when
you
look
at
a
five
or
a
10
or
a
20-year
trailing
period,
those
returns
have
exceeded
the
stated
Benchmark
return,
which
is
a
mix
of
that
70
percent
S,
P,
500
and
30
percent
fixed
income.
D
D
They
do
expect
volatility
to
continue,
especially
in
the
equity
markets,
but
and
I
do
believe
that
you
know,
as
we
continue
to
deal
with
the
inflationary
pressure,
that
the
fed's
trying
to
react
to
we're,
seeing
some
changes
in
sentiment,
especially
within
consumer
spending,
and
we're
seeing
some
of
these
asset
valuations,
especially
in
you
know,
kind
of
the
more
the
real
estate
markets
come
back
to
to
a
new
normal
or
the
old
new
normal,
as
some
folks
are
saying,
so
we're
expecting
to
see
some
volatility
in
return,
especially
on
the
equity
side.
D
The
nice,
the
nice
side,
the
nice
feature
of
it
is
we're
starting
to
see
with
the
rising
rates.
Fixed
income
is
actually
providing
some
level
of
return.
The
most
recently
fiscal
year
we
saw
some
really
strong
negative
returns,
as
as
the
bond
market
was
reacting
to
those
rate
hikes.
But
if
you
guys,
you
know,
if
you
think
about
it,
for
like
the
last
decade,
really
Equity
or
I
mean
fixed
income
really
hasn't
provided
any
diversifying.
D
We
were
in
such
a
low
interest
rate
environment
that
there
really
was
nowhere
to
go
so
we
are
seeing,
especially
in
the
first
three
months
here.
We
saw
that
at
the
fixed
income
markets
actually
provide
some
slight
returns,
so
I
think
you'll
continue
to
see
that
now
that
you
know
the
yields
are
moving
upward.
D
D
Over
the
past
couple
of
years,
we've
tended
to
be
slightly
overweight,
Equity
somewhat
due
to
just
the
the
growth
that's
been
experienced
in
that
asset
class,
but
again
also
due
to
the
fact
that
you
know,
fixed
income
wasn't
real
attractive
here.
More
recently,
we've
done
three
rebalances
in
the
last
15
months
and
in
all
three
of
those
we've
reduced,
our
Equity
exposure
back
down
to
Target
and
they've
been
allocating
those
assets
into
fixed
income.
D
Last
quarter,
I
made
mention
that
our
our
cash
balance
we're
we're
at
highs
historically,
and
that
was
because
we
were
having
a
harder
time.
You
know
finding
some
places
to
put
that
money,
especially
on
the
fixed
income
side,
and
that's
still
the
case.
A
little
bit
usually
you'll
see
us
closer
to
you
know
a
very
marginal
amount
of
cash
and
we're
just
the
bond
market
is
still
reacting,
and
so
you
know
it's
you're
trying
to
find
you
know
better
yields.
A
E
D
We've
historically,
we've
always
been
within
one
year
of
the
index.
The
index
has
a
shorter
duration,
nothing
really
Beyond
10
years,
and
it's
been
even
tighter
more
recently
because
your
yields
have
been
you
know,
fairly
low.
The
other
thing
you've
really
dealt
with
more
recently.
Is
you
know?
A
lot
of
things
have
been
getting
called
early
or
you
know,
they've
been
reissuing
debt.
You
know
at
a
at
a
slightly
higher
or
a
slightly
less
lower
yield
to
pay
off
existing
debt.
D
It's
really
more
of
a
timing
issue
and,
generally
speaking,
the
legislature,
it
just
has
a
little
less
assets.
The
contributions
that
we're
receiving
and
the
benefit
and
the
expenses
are
a
little
bit
less,
and
so
we
try
to
raise
money,
money
kind
of
in
coordination
we
usually
raise
when
we
raise
money
for
benefits
the
legislature
in
order
to
take
a
sizable
amount,
you
know
for
cash
flow
purposes,
it
usually
lasts
us
three
or
four
months,
whereas
judicial
is
we're
doing
more
like
every
other
month.
Okay,
thank
you.
D
I,
don't
really
have
any
other
prepared
comments,
other
than
to
say
that
for
this
quarter,
I
also
included
in
the
back
of
your
packets
I,
don't
plan
to
speak
to
it,
but
just
some
recent
Market
commentary
that
was
shared
with
our
board
at
our
meeting
last
week.
It's
a
quarterly
commentary
that
Baird
provides
and
it's
it's
always
available.
D
If
you,
if
you
want
to
look
at
our
board
materials,
it's
always
included,
you
know
the
long
story
for
them
is,
you
know
they
Andy
means
is
the
lead
portfolio
manager
and
I
liked
what
he
said
on
Friday.
You
know
he
said
in
the
he.
He
quoted
a
guy
named
investor
by
the
name
of
Howard
marks,
and
he
said
you
know
in
a
in
a
business
world
and
a
lot
of
you
all
have
run
businesses
or
have
been
in
leadership
of
businesses.
D
D
You
know
perception
goes
from
Flawless
to
hopeless,
and-
and
so
he
said,
you
know
they
were
talking
about
how
like
what
you
see
in
the
market,
isn't
really
an
accurate
picture
of
what
the
underlying
businesses
that
they
hold
have,
and
you
know
a
CEO
is
never
going
to
tell
you
that
things
are
flawless
with
his
business
right,
he's
going
to
say,
they're
pretty
good,
but
he's
you
know,
or
he
or
she's,
going
to
know
that
there's
things
that
could
be
improved,
whereas
in
the
stock
market
you
see
a
lot
of
reactionary,
it's
either
based
out
of
fear
or
it's
based
out
of
greed,
and
so
you
lead
to
these
big
swings,
and
so
they
they
have
not
made
a
single
change
to
the
portfolio.
D
There's
been
no
buys
or
sales
since
the
really
the
end
of
March.
When
we
did
a
rebalance-
and
so
you
know
they,
they
feel
this
as
a
a
spot.
Where
you
you
know,
there's
not
no
need
to
react.
They
plan
to
maybe
add
to
some
existing
positions,
but
you
know:
there's
there's
nothing
in
the
portfolio
that
they
think
is
broke
when
you,
when
you
look
at
the
underlying
companies.
A
A
Our
next
presenter
Beau
Barnes,
my
Bo's,
coming
forward.
I
want
to
welcome
Michael
Clancy,
he's
our
he's
new
Stafford
to
the
ppob
Michael.
Where
are
you
all
right?
Let's
make
Michael
welcome
if
you
will.
A
A
Okay,
I
stand
corrected.
There
are
some
dull
moments,
just
want
to
remind
everyone
that
we,
if
you
have
a
proposal
for
next
session,
for
a
retirement
proposal
or
Bill
that
you're
going
to
want
to
hear
in
the
next
session,
we'll
hear
those
proposals
we'll
hear
them
in
November
December
and
our
January
meeting.
If
you
want
to
get
on
the
agenda,
please
contact
staff
and
and
we'll
make
sure
we
get
you
on
the
agenda
and
but
I
look
forward
to
hearing
those
proposals.
F
Thank
you.
Thank
you.
Mr
chair
Beau,
Barnes,
Deputy,
executive
secretary
and
general
counsel
for
teachers,
retirement
system
or
TRS
I
was
asked
today
to
provide
investment
returns
for
various
periods
of
time
for
the
quarter
ending
September
30th
of
this
year,
and
with
that
we'll
go
to
the
first
slide
and
as
a
reminder
you
know,
TRS
is
a
long-term
investor.
We
we
don't
worry
too
much
about
quarters
gears
even
brief
years,
we're
a
long-term
investor.
We
invest
for
the
long
term.
F
Looking
at
the
most
recent
quarter
in
these
year-end
returns,
the
pressures
on
the
market
that
existed
when
we
reported
on
the
last
quarter
in
a
previous
meeting
still
exists
today,
as
as
both
Craycraft
noted
and
we're
still
dealing
with
those
same
pressures
and
I
think
Beau
discussed
what
those
are
that
we're
dealing
with,
but
you'll
go
the
bottom
left-hand
box
on
the
bottom
line
of
this
slide
and
you'll
see
the
net
quarter.
Return
was
negative.
F
4.13
percent
for
the
one
year
period,
negative
14.31
percent
for
the
three-year
period,
a
positive
5.08
percent
five
year,
five
point:
four:
seven
percent
ten
years,
seven
point
six
percent,
twenty
years,
7.09
percent
and
then
at
the
bottom.
You
have
the
compounded
gross
return
over
the
30-year
period
of
7.47
percent.
F
Again,
just
knowing
that
we
are
a
long-term
investor,
we
adhere
to
a
certain
discipline,
an
investment
process
now
that
we
are
getting
full
funding
on
the
budget
in
the
upcoming.
The
budget
for
the
upcoming,
the
current
by
anywhere
in
provides
full
or
very,
very,
very
neither
full
funding
for
TRS
for
eight
straight
years
and
I've
discussed
before
what
a
change
that's
made
in
the
investment
process
at
TRS.
F
So
we
are,
we
have
that
we
had
the
additional
479
million
dollars
that
came
in
the
current
budget
coming
in
at
a
very
good
time.
So
with
that,
when
the
market
was
up,
when
the
stock
market
was
up,
we
were
able
to
sell
off
about
two
and
a
half
billion
dollars
in
stocks.
We
are
now
that
the
market
is
down.
F
We
are
very
disciplined
and
prudent
manner,
investing
back,
not
just
in
stocks,
but
some
of
these
other
assets
classes
with
that
additional
money
that
we
had
so
again,
their
advantages,
even
in
down
markets
to
be
taken
that
you
can
take
advantage
of,
and
certainly
we're
doing,
that
now,
let's
see,
and
that
was
for
the
retirement
annuity
trust
I.
F
Apologize
I
should
have
noted
that
now
we
have
the
health,
insurance
trust,
same
format
and
again
these
are
preliminary
returns,
but
they're
not
going
to
change
them,
but
the
final
returns
will
not
change
much
bottom
lower
bottom
left
hand
on
the
left
hand,
side
of
the
box
there
for
the
quarter:
negative
2.98
percent
the
one
year
negative
12.9
percent
three
year,
a
positive
5.29
percent
five
year,
positive
five
point:
four
three
percent
and
ten
year
six
point
four
seven
percent
and
that's
the
return
information
as
of
the
quarter
updated
for
the
most
recent
quarter.
F
With
that
be
happy
to
take
any
questions
that
the
this
body
might
have.
Thank.
G
You
Mr
chairman,
Bo
good,
to
see
you
again.
Thank
you.
You
guys
run
a
five-year
smoothing
as
well
right,
that's
correct!
Yes,
sir!
Okay!
So
knowing
that,
although
under
statute
you're,
not
governed
under,
aren't
necessarily
the
same,
we
ultimately
end
up
paying
you
or
paying
into
the
system
as
if
you're
on
an
arc.
C
G
Between
here
in
the
middle
of
November,
get
us
something
back
if
you
took
what
you're
currently
showing
is
your
three
year
return
so
at
562,
and
assuming
that
that's
your
smooth
average
I'd
like
you
to
take
a
look
at
fiscal
year,
24
25
26,
give
me
a
five-year
in
essence,
forecast
of
how
much
additional
cash
TRS
is
going
to
need
to
survive.
I
mean
the
beauty
of
this
committee,
Mr
chairman
and
a
lot
of
people
have
done
work.
We
said
this
stuff
is
coming
to
light
now,
right
that
we
did.
G
We
simply
just
didn't
the
general
assembly,
as
a
body
didn't
pay
as
much
attention
to
previously,
and
we
ought
to
take
a
hard
look
now
because
we
know
it's
coming.
I
mean,
let's
not
fool
ourselves,
there's
going
to
be
a
spike
in
contributions
to
these
systems,
so
Bo,
if
you
could
kind
of
just
start
to
give
us
an
idea
now
and
I
know
it's
super
hypothetical
right.
But
let's
use
your
your
three
year,
your
five
six
two!
G
C
Thank
you,
Mr
chairman
Beau,
appreciate
you
being
here.
Do
you
have
a
couple
of
questions?
How
many
basis
points
are
you
all
at
now?
As
far
as
admin
cost
and
cost
of
investing.
F
Cost
of
Investments
is
just
over
30
basis
points.
You
know
three
Thirty
hundredths
of
one
percentage,
Point
admin,
it's
it's
much
lower,
obviously,
and
I-
don't
have
that
that.
C
Investment
cost
is
30
points
just
over
30.
Yes,
sir,
okay
yeah
get
that
if
you
could
get
that
number
to
us
broken
down
in
the
total
and
what
are
your
asset
values
at
the
end
of
fiscal
year,
22
compared
to
the
end
of
fiscal
year,
21.
F
Decline,
you
know
from
the
end
of
the
fiscal
year
June
30th
through
the
last
quarter,
September
30th.
We
were
at
22.9
billion,
June
30th
for
the
pension
fund,
retirement
trust,
we're
at
21.3
billion
September
30th
for
the
return
annuity
Trust
on
the
health
insurance
trust
we're
at
2.26
billion
June
30th
and
as
of
September
30th
down
to
2
billion
yeah.
C
F
Modest
decreases
with
the
continuation.
C
Of
those
markets
questioning
those
in
line
with
chairman
McDaniel's
question
about
you
doing
the
five
years
moving
how's
all
this
going
to
play
out.
You
know
I,
think
I,
appreciate
him.
Asking
that
question
is
what
I
had
on
my
radar
as
well,
so
in
all
likelihood,
based
on
what
we're
looking
at
now
I
think
it's
a
definite
possibility.
When
we
come
back
to
24
budget
session
you're
going
to
be
asking
for
additional
dollars.
Does
that
sound
like
a
reasonable
expectation.
F
I
think
it's
reasonable.
It's
not
necessarily
certain,
but
it's
certainly
reasonable
and
unlikely
I
would
say
you
know
no
crystal
ball
for
what
the
market
does
that
your
draft
for
this
one
or
the
year
after
that
one
but.
F
C
Range
and
with
the
losses
that
we're
having
now
and
forecasting
how
much
how
much
of
that
gain
is
gone
or
do
we
still
have
a
gain
from
that,
or
is
it
averaged
out
since.
F
Then
well
getting.
F
That
that
was
a
big
gain
that
we
went
up
from
that
base
and
now
we've
had
a
reduction
from
that
higher
base,
we're
at
I
think
26
billion
dollars,
retirement
annuity
trust,
two
a
little
over
two
billion.
You
know
in
health
insurance,
not
a
big
big
change
there,
but
you
know
two
point
something
you
know
north
of
two
point
for
the
health
insurance
trust.
So
there
is
obviously
some
erosion
with
that.
F
We
had
an
exceptional
year
in
2021
and
we
all
knew
it
was
an
exceptional
year
not
to
be
repeated,
and
this
is
an
off
Year
too.
It's
at
its
own.
You
know
difficulties,
but
we
still
have
some
gain
from
2021
I.
Couldn't
quantify
that,
though,.
C
F
What
we
do
is
because
we're
a
long-term
investor,
we
adhere
to
this
long-term
approach
and
it's
very
simply
we
have
a
process
in
place
where,
when
the
markets
are
up,
we
sell
you
know
we
reap
Harvest
off
of
when
our
markets
are
running
hot
and
then
when
they're
low,
when
they're
down
that's
when
we
buy,
and
it's
just
that
old
adage,
Buy
Low
sell
high
and
you
have
to
have
the
discipline
to
continually
do
that
and
then
follow
that
discipline
and
over
the
long
term,
that's
shown
to
serve
us
well.
So.
F
Yes,
sir,
it's
we,
we
did
take
off
two
and
a
half
billion
dollars
when
the
market
was
up,
so
we're
putting
that
to
work.
Now
that
the
market
is
down.
G
F
E
Thank
you,
Mr
chairman.
Well,
the
you've
made
a
comment
that
you
haven't
really
changed
your
investment
strategy,
but
you
did
lower
your
Outlook
I
mean
you
the
return
expected
from
seven
five
to
seven.
One
I
think
that's.
F
E
Okay,
which
normally
you
would
think
you
were
you,
would
gear
back
and
be
less
aggressive
is,
but
they
didn't
make
any
change
to
their
investment
plans.
No.
F
Expectation
we
we
lowered
the
assumed
rate
of
return
to
7.1
percent,
but
we're
not
investing
to
7.1
percent.
We're
still
investing
the
same
way
and
we
hope
to
achieve
better
than
seven
one
point
over
the
long
term.
But
answer
your
question:
no,
we
did
not
change.
Okay,
because.
E
To
address
chairman
Tipton's
comment,
the
ups
and
downs
we've
seen
of
covid
and
inflation
and
Ukraine
war
and
all
the
rest
of
this
over
three
and
five
years.
E
It's
still
about
five
or
5.3
to
5.8
range,
and
you
are
still
projecting
seven
one
I
know
10
year
and
20
year
are
a
lot
more
than
that,
but
I
think
in
next
year,
when
you
all
are
obligated
to
relook
your
your
investment
returns
and
under
what
was
that
house
bill
76
unless
your
crystal
ball
is
clearer
than
anybody
else's
I
think
you're
going
to
have
to
lower
that
even
further,
except
from
7-1.
E
E
H
Thank
you
Mr
chairman,
thank
you,
Bo
I'm
over
here.
Okay
to
your
left,
oh.
H
That's
okay:
we've
seen
the
markets
fall
a
bunch
in
about
three
months
and
which
is
about
the
same
time
that
I
handed
over
the
house
Reigns
to
representative
Tipton
I,
just
wondering
if
you
could
explain.
If
that's
why
the
markets
have
failed.
E
H
No
I
I
do
have
a
serious
question
and
I
do
know,
you're
investing
on
the
Long,
Haul
and
and
I'm
quite
aware
of
that.
I
think
we
all
are,
and
we
appreciate
that
fact,
if
you're
chasing,
if
you're
chasing
things
you'll
end
up
getting
caught,
and
we
I
understand
that.
But
what
we
saw
in
kers
and
and
to
some
degree,
and
maybe
TRS
in
the
0809
declines,
were
where
the
systems
were
spending
principle
in
order
to
pay
for
benefits,
and
it
was
a
significant
amount
of
principle,
especially
in
kers.
H
F
H
Okay,
let
me
let
me
rephrase
my
question:
are
you
having
to
spend
more
money
on
Prince
principled
money
than
you
expected
to
have
to
pay
for
that
and
what
is
the
long-term
effects?
If
that's
the
case,
when
it
does
Rebound
it
rebounds
small,
you
know
it
doesn't
come
back
to
where
it
was
so.
Can
you
explain
where,
if
that's
a
bigger
spin
than
you
expected
and
if
so,
what's
the
implant
impact,
it's.
F
You
know
when,
when
the
market
is
down,
if
you're
it's
a
comp,
there's
probably
a
more
complex
answer
than
I
can
give.
Today,
you
know
you
heard
Beau
great
craft
talk
about
we've
seen
some
increases
in
interest
rates.
You
know
so
that
helps
that's
on
the
positive.
You
know
with
cash
flow,
having
that
income
generated
and
we're,
we
again
took
two
and
a
half
billion
dollars
off
the
stock
market
when
it
was
hot.
So
we
we
were,
we
had
some
validity
there,
plus
we
had
the
additional
479
million
dollars.
F
You
know
on
the
budget,
so
that
was
some
just
additional
cash
or
additional.
You
know
ability
that
we
had
to
not
only
I
mean
just
to
actually
start
keep
on
investing
back
in
the
market.
No
buying
stocks
buying
real
estate
buying
Timberland,
so
I
think
we
reports
pretty
well
I
I.
H
Would
have
kindly
asked
for
a
more
detailed
response,
maybe
next
month,
yes,
sir
and
I'm
not
trying
to
be
in
pain,
but
this
is
big
stuff
and
we
saw
especially
in
kers
in
0809,
a
Major
Impact
that
when
we
had
to
spend
so
much
principle
that
when
the
markets
did
come
back
and
they
will
rebound
we're
all,
we
all
realize
this
is
the
Long
Haul.
But
when
they
do
come
back,
they
came
back
much
smaller
because
they
had
to
spin
principal
and
I
didn't
want
to
make
sure
that
TRS
is
not
in
that
situation.
A
Thank
you
all
one
final
question:
Bo
I,
don't
see
any
other
questions,
but
ballpark
figured
what
are
funding
levels
now
on
the
the
the
two
funds?
Well,.
F
I
can
give
you
what
it
was
as
of
June
30th
2021.
It
would
really
be
a
just
a
guess
for
me
to
do
it
as
of
June
30th
2022,
because
there's
so
many
things
that
go
into
that,
not
just
the
returns,
but
you
know
there's
a
lot
of
other
factors.
Actuarial.
You
know
factors
go
into
that.
You
know
how
many
people
retired,
you
know
payroll
all
those
things
go
in,
but
as
of
last
year,
the
pension
June
30th
of
last
year
the
pension
was
57.2
percent
and
health
insurance
was
61.7,
I'm,
sorry
yeah.
A
Okay,
we'll
see
enough
other
questions
that
that
concludes
our
I
guess.
F
A
Is
you
have
any
idea
what
the
the
the
I
guess
the
balance
or
the
funded
ratio
is
now
compared
to
when
it
was
back
in
16
when
we
started
putting
in
the
additional
money.
F
I
I
don't
have
that
off
the
top
of
my
head.
I
do
not
but
I'm
glad
to
get
that
you
know.
We've.
A
lot
of
things
have
been
happened
over
that
period
of
time.
Aside
from
just
the
the
funding,
you
know
the
change
in
assumptions
you
know
certainly
changed.
F
You
know
the
measurement
of
liabilities,
so
a
lot
of
things
happened
over
that
period
of
time,
but
the
additional
funding
is
is
making
a
huge,
huge
difference
and
it
may
be
more
incremental
in
the
beginning,
but
it
is
gaining
you'll
be
gaining
speed
and
it's
it's
and
again
we
would
be
without
that
additional
funding.
We
wouldn't
be
57.6
percent
funded.
As
of
June
30th.
We
would
be
something
far
far
south
of
that
and
we
would
be
in
in
real
trouble.
So
again
it's
it's
game.
Changer.
A
Would
it
be
too
much
trouble
to
ask
on
the
next
one
when
you
give
the
one
year
three
year,
five
year
ten
year
20-year
the
the
biggest
the
funding
level
at
those
points
you
know
dollar
amount
it'd
be
interesting
to
see
where
we
were
and
where
we're
at
now
percentages
are
good,
but
those
dollar
signs
it's
very
easy
to
read
too.
J
I
So
so
I
was
diagnosed
with
influenza.
Yesterday,
Steve
was
diagnosed
with
covet
a
couple
of
days
ago,
so
we
decided
it
would
better.
We
stay
home
and
not
come
into
the
into
the
office,
but
I
always
start
off
by
saying
I'm
thankful
for
for
the
ppob
and
I.
Don't
know
those
Senator
McDaniel
that
said
it,
but
if
there
had
been
a
ppob
many
years
ago,
I
don't
think
it
would
be
where
we
are
and
I
think
it's
been.
I
It's
very
beneficial
I'm
also
thankful
that
we
got
some
additional
Appropriations
215
million
in
the
state
police
and
this
past
June,
which
took
the
funding
level
from
31
to
50,
because
there's
a
small
plan
that
had
a
dramatic
impact.
It
brought
the
contribution
rate
down
from
147
percent
down
to
99
we've
also
gotten
470
more
million
over
the
next
two
fiscal
years.
The
impact
is
smaller
in
percentage
terms,
but
it
helps
push
us
more
toward
full
funding.
So
we're
very
appreciative
of
that.
I
We're
going
to
focus
on
nine,
the
9
30
quarter
in
your
packages,
information
it'll
go
out
for
30
years.
We
thought
we'd
focus
on
the
930
quarter,
because
I
know
Brad
has
got
a
an
awful
lot
of
longer
term
information,
we're
just
kind
of
tagging.
On
this
last
quarter.
We
don't
have
a
cash
flow,
exhibit
I
know.
You've
talked
about
cash
flow
here,
almost
all
the
plans
are
positive
cash
flow.
I
Almost
all
of
them
have
improved
even
to
the
point
where
the
C
A
non-hazardous,
which
was
all
which
was
a
significant
negative
cash
flow
over
the
years,
is
down.
I.
Think
in
this
last
quarter
is
a
negative,
eight
million,
that's
and
that's
before
investment
income,
and
if
there
were
any
gains,
but
that's
that's
the
net
contributions,
minus
benefit
payments
and
expenses,
so
we're
we're
in
very
good
shape.
I
Brad's
informational
substantiate
that
I'm
going
to
give
you
a
few
highlights,
I'm
going
to
ask
Steve
to
go
into
a
little
more
detail
to
the
question
that
was
asked
earlier.
If
it's
still
on
your
minds,
I
looked
at
what
are,
and
this
has
to
do
with
the
the
kind
of
the
amortization
of
the
five-year
returns.
But
I
looked
as
of
June
30th
of
2021.
I
We
had
our
market
value
was
about
two
billion
dollars
more
than
the
Actuarial
value,
so
we
have
a
that's
a
cushion
that
we're
going
to
continue
to
amortize
in
we're
going
to
lose
something
in
this
current
fiscal
year
with
the
returns
of
negative
five
to
negative
six
percent.
But
we
had
a
nice
cushion
built
up
between
market
and
Actuarial
value.
I
But
if
you
go
to
slide
two,
please.
I
So
we've
had
challenging
markets.
Everybody's
talked
about
that
Steve's,
going
to
show
a
little
bit
of
Market
environment
background.
Brad
gross
is
going
to
add
a
lot
to
it.
We're
fortunate
we've
exceeded
our
benchmarks
substantially.
I,
wouldn't
consider
that
we
can
do
that
over
any
longer
period
of
time
and
if
you
look
over
longer
periods
of
time,
we've
beaten
our
benchmarks
by
20
to
10
to
20
basis
points
but
10
basis
points
is
Worth,
22
million
dollars
to
it.
I
So
if
we
can
beat
by
20
basis
points,
that's
44
million
Over,
The,
Benchmark
and
The
Benchmark
is
taking
our
targeted
asset
allocation
and
invest
investing
in
indexes
so
we're
either
making
adjustments
above
or
below
the
targets
and
we're
either
and
and
we're
either
picking
better
or
not
better
in
terms
of
who's
running
the
money.
But
on
balance
we've
been
adding
value
over
all
periods
of
time.
I
We
we
pretty
good,
take
pride
in
our
risk,
adjusted
returns.
When
we
look
at
Wilshire
information,
we
think
that's
going
to
continue
in
the
first
quarter
of
2000
of
fiscal
2023
and
that
is
on
a
risk-adjusted
basis,
we're
in
the
top
desso
and
and
a
Return
base.
Lately,
we've
been
in
a
top
quartile
conservative
position,
partly
not
not
skill,
but
luck
or
not
luck,
but
skill.
However
I
was
here
we're
we
are
designed
to
be
a
conservative
lower
risk
in
all
the
funds
we
invest
in.
I
So
if
you
look
at
the
last
quarter,
the
one
year,
the
three
year,
the
five
year,
the
10
20
and
30-year
periods
in
the
pension
plans,
we've
beaten,
The,
Benchmark
and
94
of
those
quarters.
I
Now
that
doesn't
mean
that
each
and
every,
if
you
took
each
and
every
quarter
for
30
years,
we've
beaten
a
94
time.
It
says
that
in
the
most
recent
period,
end
of
June
and
ended
September
30th.
If
you
look
at
five
different
plans
and
six
different
time
periods
or
seven
different
time
periods,
there's
35
measures
and
we've
we've
outperformed
in
33
of
those
35
measures
at
those
periods.
I
In
the
Assurance,
we've
done
it
69
percent
of
time,
so
it's
cons
real,
consistent,
outperformance
again,
not
not
90
percent
of
every
quarter,
but
in
those
time
periods
94
of
the
time
and
we're
continuing
to
look
for
opportunities
to
invest.
Steve
can
address
that
more.
But
you
were
talking
earlier
in
some
of
the
discussions,
but
we
have.
I
We
have
been
over
allocated
in
cash
for
a
variety
of
reasons,
not
the
least
of
which
is
the
Appropriations
they've
gotten
the
termination
of
a
manager
who
had
about
900
million
dollars,
the
cessation
of
an
employer
all
of
those
a
lot
of
cash
and
are
into
the
system
and
we've
been
deploying
it
over
a
period
of
time.
We
we
currently
in
our
recent
period
we've
either
deployed
or
committed
about
two
billion
dollars
in
assets
across
all
plants,
so
Steve
I'll
turn
it
over
to
you.
J
All
right,
thank
you
good
afternoon
again.
This
is
Steve
Weller
CIO
for
kppa
I'll,
just
quickly
flip
to
page
four,
and
really
this
this
is
showing,
as
has
been
well
covered
already.
The
the
first
quarter
of
fiscal
23
was
a
continuation
of
the
theme
we
saw
at
the
end
of
fiscal
22..
J
There
were
very
few
safe
harbors
for
investors
to
hide
in
the
first
quarter,
with
negative
performance
across
almost
all
asset
classes,
with
quite
a
bit
of
variance,
and
we
see
in
the
fixed
income
markets,
negative
returns
again,
which
is
unusual,
I
think
as
as
was
mentioned
before,
fixed
income
has
typically
been
a
ballast
for
the
riskier
parts
of
the
market,
being
the
private
and
the
equity
side
and
has
not
served
its
purpose
at
least
recently,
but
with
the
rise
in
yields,
the
expectation
is
that
it
will
become
more
of
a
ballast
once
the
fed
and
Global
central
banks.
J
You
know
once
they
get
inflation
under
control
and
the
hiking
the
quantitative
tightening
it
has
peaked.
So
we
anticipate
that
in
the
coming
quarters,
I
don't
think
we're
there
yet.
So
we
continue
to
expect
volatility
across
all
markets
day
to
day
week
to
week
and
month
to
month,
so
I
think
we're
being
cautious
as
Dave
mentioned
in
deploying
capital.
J
In
our
allocations,
where
we
see
opportunities,
you
know
our
our
sizing
of
our
allocations,
we're
out
reallocating.
At
least
you
know,
on
a
monthly
basis,
they've
been
in
smaller
bite
sizes
than
what
we
would
typically
use,
and
that
really
has
to
do
with
the
level
of
volatility
that
we
see
in
the
markets.
J
The
jumping
to
page
seven
page,
seven
and
eight
are
preliminary
and
I
would
caution.
They
are
preliminary
I,
don't
expect
them
to
change
much
in
the
coming
days,
but
we
should
see
final
performance
soon.
These
are
estimates
of
performance,
Neta
fees
for
the
pension
and
insurance
plans
and,
as
Dave
highlighted
performance
across
plans
held
up
relatively
well
in
the
first
quarter.
J
Given
that
level
of
Market
volatility
for
the
five
pension
plans,
performance
range
from
minus
2.1
percent
to
minus
3.0
percent
and
performance
in
the
insurance
plans
ranged
from
minus
2.3
percent
to
minus
3.0
percent
as
well
and,
more
importantly,
you
know,
I
think
our
performance
as
Dave
highlighted
Against
The
Benchmark
specific
for
each
plan
ranged
from
120
to
170
basis
points
for
the
quarter
on
a
net
basis
and
the
pension
plans
and
range
from
160
to
190
basis
points
for
the
insurance
plans
on
a
net
basis
for
the
first
quarter.
J
So
we
we
held
up
relatively
well.
That
has
a
lot
to
do
with
both
our
allocation,
which
is
a
primary
driver
as
well
as
our
positioning
within
our
allocations,
both
on
a
manager
level
basis,
as
well
as
decisions
that
staff
is
making
as
to
where
we're
allocating
capital
very
quickly
on
page
9
and
10..
Those
are
updated
allocations
as
of
9
30.
J
and
I
would
note
that
the
allocations
for
plans
that
are
outside
of
the
current
IPS
allocation
ranges
are
highlighted
in
red.
The
majority
of
these
are
in
private
asset
classes,
where
it
can
take
longer
to
deploy
Capital
we're
actively
deploying
capital
and
excuse
me
we're
continuing
to
manage
the
funds
towards
the
revised
IPS
allocation
targets.
Investing
those
funds
Dave
mentioned
from
Appropriations
cessations
and
mandate
terminations,
we're
also
working
with
each
plan's
respective
investment
committee
on
potentially
updating
acid
allocation
targets
and
ranges
given
change
in
markets
as
well.
As
you
know,
with
the
Capital
Market
assumptions.
J
Are
there
there's?
You
know
both
the
rise
in
yields,
as
well
as
the
pullback
inequities
has
caused
Capital
Market
assumptions
to
change
pretty
radically
over
the
course
of
this
year,
and
so
our
expectations
for
where
we
might
achieve
return
going
forward
has
changed
and
that
may
dictate
that
we
change
what
our
allocation
targets
are
and
what
our
ranges
might
be
between
Capital
that
we
have
already
committed
new
mandates
and
internally
managed
programs.
We
anticipate
to
have
all
plans
within
their
allocation
ranges
by
early
next
year.
J
That's
the
goal
we
have
for
our
strategic
plan
and
we
anticipate
achieving
that.
It
is
a
little
dependent
on
some
of
that
committed
Capital
being
called
by
managers
and
that
will
be
driven
by
market
conditions.
You
know
we,
we
appreciate
the
Prudence
of
our
managers
and
not
rushing
to
deploy
capital
and
looking
for
the
best
opportunity
and
I
think
that's
that's
been
bored
out
in
the
returns
of
those
individual
managers.
So
we
fully
support
that
in
anticipated.
You
know,
market
conditions
will
dictate
how
quickly
they
can
deploy
capital.
A
Thank
you.
We
do
have
a
few
Senator
McDaniel.
G
Thanks
guys
again
for
your
presentation,
there
kind
of
same
question
that
I
posed
to
TRS.
G
G
Well,
yeah,
let's
so,
let's
say
that
you
change
your
assumed
rate
of
return
to
what
your
three
year
is
there
and
we
had
to
go
a
couple
of
budget
Cycles,
utilizing
that
same
thing
middle
of
next
month.
Could
you
get
me
some
kind
of
a
look
out
over
the
next
five
fiscal
years
as
to
how
much
additional
contribution
the
systems
would
require
sure.
I
I
think
I
think
the
best
thing
we
can
do
we'll
do
that
I
doubt
whether
it'll
be
4.6
percent
I'm,
not
sure
what
it's
going
to
be,
but
we're
in
the
at
the
we're
in
the
process
and
throughout
through
the
year
end.
We
Gather
and
GRS
gathers
Capital
Market
projections
from
about
a
dozen
highly
qualified
firms,
most
investment
managers,
some
Consultants,
and
when
we
get
that,
we
can
get
back
to
you
also
and
say
Here's
what
the
Outlook
looks
going
forward.
It'll
be
more
of
a
seven
to
ten
year.
I
Look
not
a
three
year.
Look
but
I
I
at
five
and
a
quarter
for
the
for
the
two
plans
and
six
and
a
quarter
for
the
other
eight
plants
I'm
pretty
comfortable.
We
are
at
the
most
conservative
range
of
anybody
in
the
country
and
some
of
the
stuff
Brad.
It
will
show
say
the
same
thing
so
I
I
doubt
whether
there's
a
need
to
lower
the
five
and
a
quarter
and
six
and
a
quarter,
and
there
might
be
some.
G
G
I
We
well
we've
had
in
the
past.
We've
had
what
they
call
the
Lost
decade,
where
equities
are
nothing
for
10
years
effectively.
Nothing!
So
you
know
that's
on
the
that's
on
the
radar
trying
to
protect
from
that.
At
the
same
time,
fixed
income
yields
are
going
up
to
help
offset
that
but
yeah
I
understand
and.
J
We
can
certainly
put
together.
You
know
what
that
would
mean
what
what
the
portfolios
would
look
like
under
that
three-year
number.
If
we
assume
that
was
what
the
the
portfolios
earned
over
a
three
to
five
year
time
period,
as
well
as
the
difference
between
that
and
what
current
capital
Market
assumptions
given
our
allocations
would
mean.
A
C
You
Mr
chairman,
Dave
and
hope
you
guys
get
to
feeling
better
soon.
I,
don't
know
if
this
was
part
of
your
packet.
We
have
in
our
packet
information
about
the
assumed
rates
of
returns
in
investment
returns
from
various
State
systems
and,
of
course,
Kentucky
is
by
far
the
lowest
on
that
list.
At
5.25,
the
next
closest
is
Michigan
at
six
percent.
Have
you
all
done
some
long
range
predicting
on
at
what
level
of
funding
would
you
need
to
be
at
to
increase
that
assumed
rate
of
return?
C
I
I
think
we'll
be
having
those
discussions
in
the
spring.
Each
is
the
C
and
the
K
boards
will,
in
conjunction
with
investment
staff,
but
importantly
with
GRS.
I
The
you
know,
they'll
be
looking
at
a
seven
to
ten
year.
Horizon
and
and
almost
certainly
and
they'll
have
input
on
what
expectations
are.
But
there's
a
part
of
your
question:
I
missed
that
I
want
to
address
and
I.
C
I
was
just
referring
to
what
what
are
your
projections
on?
Oh,
when
would
you
at
what
level
of
funding
would
you
need
to
be
at
to
even
consider
yeah.
I
I
Is-
and
you
know
the
canine
has
is
currently
16.9
by
the
way
when
we
began
to
get
our
additional
funding
was
12.9
and
it's
probably
going
to
be
between
18
and
19,
at
June,
30th
of
for
June
30th
2020
to
it's,
not
a
it's,
not
a
precise
quantitative
measure.
If
it's
there's
a
bit
of
judgment
involved,
but
I
I'd
like
to
reserve
that
we
have
those
discussions
with
the
actuary
and
their
projections,
the
future
and
I.
C
Do
have
one
additional
question
and
it's
not
in
your
presentation,
but
it's
some
information
in
the
next
presentation
that
impacts
kpba,
and
that
is
the
basis
points
for
management
fees
and
incentive
fees.
Could
you
elaborate
on
the
total
basis
points
that
are
going
up?
In
particular,
the
incentive
fees
are
going
up.
Could
you
elaborate
on
the
reason
for
that
yeah.
I
Management
fees
will
be
coming
down,
I
think
you'll
see
they've
come
down
meaningfully
over
the
last
five
years.
That's
the!
Where
percent
of
assets
we
get
charged,
the
incentive
fees
vary
substantially
from
year
to
year
and
they're,
driven
by
the
the
excess
profits
that
the
those
managers
earn.
I
So
when
we
have
a
good
year
like
last
year
and
up
25
incentive
fees
are
likely
to
be
really
high
and
when
we
have
a
bad
year,
they're
likely
to
be
low
but
they're
tied
more
to
the
private
assets,
not
the
public
assets
so
in.
In
fact,
private
assets
did
much
better
than
public
assets
last
year,
so
it
won't
be
quite
as
much
of
a
swing,
but
that's
that's!
It's
all,
driven
by
the
by
market
levels,
nothing!
We
we
established
other
than
in
the
original
contract.
Yeah.
I
Yeah
we
do,
we
do
calculate
them
differently
than
teachers
does
and
I'm
I'm
trying
to
come
to
resolve.
So
we
ought
to
do
it
the
same
way.
Their
method
I
was
just
different
than
ours.
Neither
one
is
wrong
or
right
it's
just.
I
We
do
it
differently
and
I
I'm
an
I'm
inclined
to
think
we
ought
to
do
it
the
same
and
we've
had
at
least
one
conversation
with
them
about
doing
that
and
I
don't
want
to
forecast,
but
I
I'm,
you
know,
I
might
say
I'm
leaning
more
to
towards
the
way
they
do
it
than
the
way
we
do
it,
but
we'll
try
to
reach
some
resolve.
Thank
you.
I
had
one
more
slide,
if,
if
you
could
just
to
quickly
because.
E
Actually,
Mr
chairman,
it's
more
of
a
comment
and
it's
the
first
time
in
my
six
years
on
ppob
that
kers
30-year
return
has
been
higher
than
trs's
30-year
return
and
that's
the
first
time
in
six
years,
I've
seen
that
and
which
says
everybody
reverts
to
mean
eventually
that
you
know
you
look
back
20
over
20
years
that
was
a.com
and
recoveryoffthe.com.
Now
that
the
recovery
off
the.com
crash
is
out
of
it.
These
two
plans
are
managed
very
closely
historically
in
terms
of
percentage
return.
I
Well,
you're
picking
a
very
favorable
point
in
time
for
us
because
we're
so
conservatively
managed-
and
you
know
we're
at
the
market
decline
but
at
the
same
time
I
think
I
think
we've
done
a
really
good
job
of
adding
value
to
what
could
have
been.
We
could
have
gotten
had
we
been
totally
passive,
so
you
know
20
to
40
million
dollars
a
year
effectively
over
a
30-year
period
of
time.
The
equivalent
of
that
is
quite
a
bit
of
impact,
but
I
know.
I
Senator
Higdon
is
very
interested
in
how
we
save
money
and
I
had
one
more
slide.
That
would
kind
of
deal
with
that.
I'm.
I
A
I
Yeah
I
call
looking
forward.
We
have
been
slowly
developing
a
look
at
our
staffing
going
forward
and
I
say
slowly,
because
we've
had
the
departure
of
a
CIO.
We
have
a
massive
reporting
and
data
project
going
on
we're
short
staffed.
Stevens
people
are,
you
know,
I'm
getting
I'm
getting
10
p.m,
emails
as
fit,
but
we're
we
pulled
these
cios
together,
we're
developing
a
three
to
five
year.
Staffing
plan
we're
going
to
adjust
some
positions
to
reduce
The
Silo,
and
so
not
just
somebody
does
Real
Estate
something
that's
private.
I
We
want
more
interaction,
more
collaboration,
so
that
the
description
will
be
written
differently.
We
are
beginning
to
recruit
for
the
three
18a
except
positions
that
we
have
for
starting
off
with
real
estate,
we're
going
to
be
adding
a
senior
level
fixed
income
person
to
support
Steve
we're
going
to
be
hiring
additional
Junior
and
support
staff.
We
want
to
lever
the
senior
Talent
we
have
without
adding
more
we're,
focusing
on
areas
to
reduce
investment,
related
fees
and
expenses,
and
that's
Senator
Higgins
encouragement
to
us.
I
I
If
that
makes
sense
and
we're
looking
at
that
right
now,
for
example,
core
fixed
income
might
be
one
area,
structure
and
Equity
might
be
an
area
where
we
do
more
indexing
and
then
finally,
we're
just
we're
just
analyzing
the
things
we
do
in
the
resources
we
got
so
we're
I
would
say,
we've
getting
much
more
active
and
how
can
we
run
this
operation
better.
A
Dave,
it
certainly
makes
me
smile
and
I
appreciate
that
and
a
lot
of
people
we've
we've
talked
about
this
over
the
years
where
these
fees
come
and
there's
no
Magic
Pot
out
there
yeah
Senator
McDaniel
it.
It
comes
out
of
the
Corpus
of
of
the
the
retirement
funds,
and
so
every
time
you
save
a
dollar
in
fees.
That's
a
dollar
extra.
We
have
in
the
in
the
fund,
so
I
appreciate
you
watching
that,
and-
and
thank
you
for
that
report.
You're.
A
Does
that
conclude
your
report?
Yes,
yes,
sir.
Okay,
any
further
questions
from
the
committee
I
know:
okay,
Centric.
There
has
a
comment.
Thank.
B
You
Mr
chairman
for
those
of
you
who
were
in
The
Local
Government
committee
meeting
this
morning.
This
will
be
repetitive,
but
I
noted
that
the
league
of
cities
had
some
cers
changes
that
they
intend
to
lobby
for
in
the
next
session
and
I
I
reminded
them,
and
everyone
about
your
requests
that
you
and
co-chairman
Tipton
made
to
leadership
that
in
the
future,
during
a
session,
any
pension
related
bill,
whether
it's
a
major
overhaul,
a
minor
tweak
or
a
slight
adjustment
needs
to
be
vetted
first
by
ppob
and
so
I.
B
A
You
thank
you
leader
there,
and
we
certainly
have
put
that
word
out,
but
it's
always
good
to
hear
someone
else
saying
it
also,
and
thank
you
for
mentioning
that
in
in
the
local
government
committee
I
know,
a
lot
of
people
are
shocked
that
we'd
be
out
here
in
one
hour,
but
I
entertain
a
motion
to
adjourn
hold
on
hold
on
a
second
okay
Brian.
All
right,
I
didn't
see
that
on
the
agenda,
your
lrc
staff,
then
right
I
thought
you
were
in
a
hurry
to
leave
Brad.
K
A
Well,
since
it's
my
mistake,
overlooking
your
your:
if
you
had
had
it
down
that
you
were
presenting,
I
would
have
caught
it,
but
it
just
said:
lrc
staff,
so
Mr
staff.
Please
proceed.
K
Alrighty
so
I'll
go
ahead
and
get
started
here,
get
the
presentation
up.
K
From
beginning
there
we
go
all
right,
so
I
am
Brad
gross.
The
committee
staff
administrator
with
the
public
pension
oversight
board
I,
will
say
up
front
as
I
said
last
time,
taking
over
this
task
from
Beau
Craycraft,
who
was
a
good
investment
guy
I
am
not
an
investment
expert.
I
don't
play
one
on
TV,
but
I
will
certainly
do
my
best
to
answer
your
questions
and
to
kind
of
walk
through
our
annual
investment
review
that
we
have
to
do
as
part
of
our
statutory
duties.
K
The
systems
looked
over
the
September
30
2022
returns.
This
is
looking
over.
The
physical
year
ended
returns
that
we've
had
them
come
in
and
report
on,
and
this
is
just
to
try
to
provide
a
little
bit
additional
information
kind
of
aggregate.
What
they
do.
Look
at
some
peer
analysis
and
to
provide
some
information
to
you
all
so,
certainly
we'll.
K
Look
over
total
assets,
performance
allocation
fees,
net
cash
flow,
the
information
we
typically
provided
annually,
one
special
topic
which
is
relatively
short
and
a
few
other
required
things
and
I
will
certainly
try
to
be
as
brief
as
possible.
K
So
certainly
when
we
look
at
the
total
asset,
pull
for
the
fiscal
year
in
the
year
ended
2022,
as
the
returns
were
down.
Certainly
the
asset
levels
were
down
assets
for
the
Pension
funds
across
the
board
dropped
4.34
billion
to
38.07
billion.
The
insurance
funds
dropped
0.65
billion
down
to
8.83
billion.
K
So
just
as
a
kind
of
and
this
question
kind
of
got
brought
up
and
I
included
this
slide.
So
last
year
we
certainly
had
record
returns
and
we
talked
a
lot
about
those
things.
I
think
every
pension
fund
in
the
country
issued
press
releases
and
it
was
a
great
time
to
hear
really
good
returns.
K
So
that
means
when
the
valuation
comes
up,
when
they
go
to
do
the
Actuarial
work
they're
going
to
have
plus
20,
if
you
will
of
an
experience,
that's
going
to
get
filtered
into
the
valuation.
Now
all
public
Pension
funds,
typically
they
they
smooth
out
their
gains
and
losses
over
a
five-year
period.
So
we're
still
smoothing
into
that
gain.
If
you
will
over
the
last
year
over
the
next
this
year
in
the
next
five
years
as
we
go
along,
so
those
things
positively
impact
our
funds,
you
may
remember.
Last
year
we
talked
about
that.
K
The
funds
projected
funding
levels
and
unfunded
liabilities
in
many
cases
would
go
down
or
that
there
rights
would
go
down
or
that
their
rates
wouldn't
go
up
as
much.
In
fact,
TRS
had
assumption
changes
last
year
that
they
are
smoothing
in
at
the
same
time
as
they
did
the
investment
gains
from
last
time.
Now,
the
opposite
side
of
that
is
certainly
this
year,
where,
if
we
look
across
Pension
funds
that
are
greater
than
a
billion
dollars,
the
average
return
has
been
about
negative
seven
percent,
and
this
is
just
kind
of
a
note.
K
Sometimes
we
look
at
these
two
returns
and
go.
Oh
there's
a
lot
of
excess
gain
between
these
two
different
ones.
If
you
look
on
top
I
mean
you're
talking
about
a
plus
20
against
that
assumption.
If
you
look
below
you're
looking
at
a
negative
14.,
because
everything
zero
value
is
based
upon
that
assumption
not
based
upon
zero,
so
certainly
those
things
will
produce
Actuarial
losses
and
certainly
increase
costs
from
what
the
projections
were.
K
Last
time
around
now,
that
being
said,
you
know
we
probably
haven't
wiped
out
all
of
the
gains
from
last
year
and
it
will
vary
by
System,
but
you
will
see
some
sort
of
impact
when
we
start
looking
at
those
projections
going
forward,
so
FY
22
what
performed?
Well?
What
didn't?
Well,
certainly,
you
can
see
there
on
the
top
left.
These
are
indexes
or
benchmarks
that
Pension
funds
have
private
real
estate.
K
Commodities
and
private
Equity
did
well
and
in
fact,
even
when
you
look
at
that
private
Equity
at
14.9
percent,
there
is
no
real
good
index
to
point
to
because
it
is
a
non-publicly
traded
asset.
Most
Pension
funds
probably
had
25
20
25
30
Returns
on
private
equity,
but
you
can
certainly
see
in
the
fixed
income
the
equity
markets.
You
know
when
you
look
at
the
large
cap
you're
looking
at
negative
10.6
for
the
year.
That's
the
S
P
500
..
K
So
we
should
expect
Pension
funds
that
have
a
lot
of
private
real
estate,
Commodities
and
private
Equity
if
they
have
more
of
their
portfolio
dedicated
to
that,
we
should
see
higher
returns.
If
the.
If
we
look
at
a
pension
fund-
and
they
don't
have
as
much
of
that-
and
they
have
more
traditional
equities
and
fixed
income,
we
would
expect
their
returns
to
be
lower
and
in
a
minute
when
we
look
at
kind
of
the
average
of
States,
we
do
a
peer
group
each
year.
K
If
you
look
at
the
average
of
states,
it
is
kind
of
all
over
the
place,
but
the
ones
that
are
that
perform
the
best
for
the
fiscal
year
ended.
2022
had
more
of
those
kind
of
top
three
asset
classes,
so
certainly,
as
mentioned
before
and
I
won't
go
over
it.
It's
been
a
FY
22
had
some
interesting
things
about
it,
with
inflation,
interest
rate
hikes,
consumer
sentiment
and
just
to
give
you
an
idea
of
what
that
one
quarter
did
the
s
p
was
down
16.1
percent
for
the
quarter.
K
K
So
when
we
see
these
really
high
returns
that
are
well
above
your
traditional
Equity
markets,
you,
you
have
to
sit
back
and
go
okay.
Why
is
that,
and
certainly
part
of
this
is
going
to
be,
that
there
is
a
lag
and
probably
over
the
next
couple
months
the
literature
I've
been
reading.
I've
talked
to
the
systems
a
little
bit,
we're
going
to
begin
to
see
a
write
down
in
the
value
of
those
private
assets,
so
they're
not
publicly
traded,
which
means
they
value
them.
At
some
point,
think
about
your
mortgage
on
your
house.
K
Your
house
is
worth
what
the
market
says.
It
is
that
you
might
have
a
a
you
might
have
an
appraisal
that
has
a
number
from
a
year
ago
or
six
months
ago.
That
is
different
from
what
the
market
value
is
today,
and
so
private
Equity
firms
and
so
on
will
value
those
assets
as
we
move
along.
But
if
the
market
continues
to
stay
down,
we'll
still
see
some
write
Downs
in
those
asset
values
as
we
move
along.
H
Thank
you,
Mr
chairman.
Would
you
like
to
weigh
in
on
the
change
in
chairman
affecting
I
still
believe
it
has
major
impacts?
Mr
chairman?
No
could
could
you
speak
to
the
changes
that
we've
seen
in
Market
or
not
Market,
in
in
in
interest
rates?
We
know
that
interest
low
interest
rates
were
one
of
the
reasons
why
we've
had
lower
returns
for
many
years.
Even
when
the
markets
were
up,
we
were
told
that
that
was
holding
us
back,
that
you
want
that
the
interest
rates
were
hurting
us.
H
K
K
Certainly
you
know
from
what
I
can
understand
and-
and
the
folks
before
me
might
be
able
to
speak
to
that
much
more
eloquently,
but
in
the
in
the
short
run,
certainly
like
when
we
look
at
the
FED
fund
rate
and
things
of
that
nature,
so
housing
prices
are
the
interest
rate
on
homes
will
go
up
the
interest
rate
that
businesses
deal
with.
You
know
they're
going
to
go
up,
and
so
that
has
a
drag
on
things
like
equities.
K
K
You
know
I,
don't
know
about
you,
but
as
interest
rates
go
up,
I
tend
to
have
less
debt,
I
tend,
and
it's
been
certainly
inflations
up.
At
the
same
time
too,
so
I'm
spending
more
on
basic
Goods
than
I
am
on
things
that
are
are
fun
in
nature,
but
I
think
it's
I
think
it
just
creates
problems
for
the
markets
right
now.
Okay,
thank
you,
but
if
I
knew
what
it
was
going
to
do
in
the
long
run,
I
wouldn't
be
here.
K
So
your
policy
Benchmark
tells
you
you
know:
how
did
you
do
against
a
basic
Index
Fund
like
Mr
eager
talked
about?
You
can
see
our
assumed
rate
of
return?
Are
we
looking
at
something
that's
going
to
produce
axial
gains
or
losses
and
then
down
below
there?
You
also
see
some
peer
groups.
We
go
out
and
look
at
the
quarterly
fiscal
year-ended
returns
of
all
the
Pension
funds
that
we
can
get
a
hold
of
believe
it
or
not.
You
can
go
to
some
states
and
right
now
and
you
can't
find
out
what
their
year-end
return
is.
K
You
won't
find
it
on
the
internet,
you
won't
see
it
until
you
hit
their
their
annual
reports
toward
the
end
of
the
year
and
you
can
kind
of
see
down.
There
are
peer
group
average
was
minus
4.9
percent
for
the
year
and
trending
on
over.
That
was
8.4
percent
for
the
10-year
I've
included
two
other
benchmarks
that
we
were
able
to
find
that
were
out
there
of
larger
funds
and
smaller
funds,
and
you
can
kind
of
see
those
as
well
too.
K
So
that's
kind
of
three
ways
you
you
can
look
at
it.
What
how
did
our
active
management
do?
How
did
we
do
actuarially
and
how
did
we
do
against
everybody
else,
but
certainly
a
down
year
across
all
funds?
But
I
will
say
this.
K
So,
if
you
remember
back,
when
we
talked
about,
there
were
three
asset
classes
that
did
really
really
well.
These
were
top
performing.
Funds
have
a
huge
allocation
to
private,
Equity,
private,
real
estate
and
commodities.
In
fact,
the
top
one
is
Oregon,
which
is
in
excess
of
six
percent,
had
a
30
allocation
to
private
Equity
alone.
Most
Pension
funds
are
about
10..
Our
funds,
you
know,
are
somewhere
well.
K
We
have
every
year,
but
this
is
the
25-year
return
each
year
that
you
can
look
at
as
far
as
seeing
kind
of
the
ups
and
the
Downs
there
were
years
where
kers
cers
was
the
highest
returning
fund.
There
were
years
where
TRS
was
there's
years,
where
lrp
and
jrpr,
and
certainly
this
year,
where
you
know
kppa,
is
the
highest
returning
fund
based
upon
their
asset
allocation.
K
We
talk
about
a
lot
of
the
same
things
over
and
over
again,
asset
allocation
typically
drives
90
of
the
return.
So
what
asset
class
are
you
involved
in
whether
it's
equities,
fixed
income,
alternative
assets
and
you
can
kind
of
see
a
description
of
those
we
keep
those
in
there
every
year?
But
on
the
right
you
can
see
that
the
average
public
pension
fund
from
the
National
Association
of
State
retirement
administrators
is
roughly
half
the
monies
in
public
equities.
K
L
Brad,
thank
you
I'm
over
here.
Oh
hey,
sir,
when
you
were
talking
about
six
to
ten
percent
of
private
equity.
Does
that
include
private
real
estate
as
well?
No.
K
Can,
as
far
as
like
what
our
individual
funds
are,
I
think
most
of
it's
private,
but
we
could
get
a
number
from
them.
I've
got
a
real
estate
number
in
general
on
a
slide
going
forward,
but
we
do
have
private
real
estate
as
well.
Here.
L
Because
I
know
where
my
son
farms
in
Mississippi,
they
have
16
sections
School
sections
set
of
set
apart
by
the
state
that
that
funds
for
renting
that
Mile,
Square
land
I
think
that's
640
acres,
you
know
and
they
pay
so
much
per
acre
anyway.
That
goes
to
the
schools,
but
also
I,
found
out
that
there
are
teacher
retirement
folks
that
actually
purchase
land
as
an
asset
there
and
then
lease
it
back
to
a
farmer
or
somebody
that
wants
to
farm
it,
and
that
turns
out
to
be
a
very,
very
stable
investment.
L
K
So
this
fun
little
chart
just
kind
of
shows
the
asset
allocation
by
asset
class
for
each
of
our
funds.
Certainly
cers
has
a
little
closer
to
a
typical
portfolio,
except
they
got
a
little
bit
higher
allocation
to
fixed
income,
lower
allocation
to
the
alternative,
kers.
Certainly,
a
very
low
Equity
exposure,
which
is
kind
of
typical
for
the
fund
being
16.8
percent
funded
TRS,
certainly
moves
up
that
and
lrp
and
JRP.
As
you
see
the
equity
exposures,
but
you
can
see
the
public
equity
in
blue,
the
green
shaded
is
public
and
private.
K
Fixed
private
Equity
would
be
that
brown
number,
so
you
can
kind
of
see
that
range
there
real
return,
which
is
typically
real
assets.
Things
like
Timber,
if
you
will
land
and
so
on,
would
be
that
purple
real
estate
would
be
the
yellow
and
then
the
cash
would
be
the
gray,
and
certainly
Mr
eager
talked
about
the
cash
allocations
and
they're
working
to
deploy
those
just
to
something
a
little
bit
easier
to
see.
K
If
you
want
to
see
what
these
average
returns
are,
what
these
average
turns
are
against
those
comparisons
in
each
of
our
funds,
in
kind
of
a
basic
level,
you
can
see
that
I've
also
included
a
peer
group
from
Cliff
water
research,
which
does
an
asset
allocation
review
every
year.
Theirs
is
pretty
typical
in
the
equity
and
fixed
income
and
their
their
review.
That
Alternatives
were
a
little
bit
higher
in
the
example,
and
you
can
kind
of
see
how
we
fare
out
I'm
going
to
keep
going
and
not
get
too
much
in
the
weeds.
K
Unless
you
want
me
to
so
fees
and
I'll
probably
go
for
this
just
real
quickly.
There's
been
a
lot
of
discussion
over
the
years
about
fees
and
we've
done
some
research.
There
have
been
bills,
there
have
been
many
Senate
Bill
twos
in
our
life
and
one
Senate
Bill
two
in
2017
was
a
transparency.
Bill
and
part
of
that
bill
was
to
to
basically
have
the
systems
consistently
report
fees,
and
there
was
a
big
discussion
about
these
incentive
fees
at
that
time.
So
that's
still
an
ongoing
discussion
among
public
Pension
funds.
K
Is
it
a
fee?
Is
it
not
a
fee
all
right,
because
it's
actual
profit
sharing
it's
not
a
physical
dollar
that
the
systems
pay.
It's
part
of
the
returns
that
they
rake
up
off
the
top,
but
part
of
those
bills,
said
that
the
funds
in
some
form
of
fashion
had
to
report
those
incentive
fees.
So
you
can
kind
of
see
here.
If
we
look
at
kppa,
we've
listed
the
total
fees,
including
the
incentive
fees.
K
You
can
see
on
the
blue
there
looking
down
2019
to
2022,
which
total
fees
have
increased,
including
the
incentive
fees,
their
management
fees
have
been
coming
down
over
the
course
of
time,
but
certainly
incentive
fees.
As
Dave
mentioned
it's
based
upon.
You
know
how
well
did
the
fund
do
now?
If
you
look
back
and
remember
that
private
Equity
did
really
well
this
year
right,
then
you're
going
to
have
a
lot
of
incentive
fees
and
typically
they
have
like
a
hurdle
rate.
So
there's
a
general
management
fee.
K
But
then
the
carried
interest
or
incentive
fees
are
based
upon
hitting
a
certain
in
certain
rate
of
return,
and
then
they
share
the
return
above
that
amount.
So
you
and
then
you'll
see
years
where
it's
it's
relatively
low,
as
well
too.
You'll
even
see
a
negative
in
the
TRS
side,
there's
sometimes
potential
clawbacks.
If
you
will,
if
there's
a
really
down
year
as
well
too
so
TRS,
just
as
a
note
on
theirs,
you
can
see
those
values.
K
They
typically
have
lower
fees
in
general,
a
lot
of
that,
particularly
on
the
management
fee
side.
They
do
a
lot
of
internal
management
of
their
portfolios.
To
one
of
the
questions
that
kind
of
got
brought
up.
Gfrs
has
the
lowest
fee
structure,
you're,
looking
at
nine
a
little
under
10
basis,
points
to
run.
That
fund
currently
certainly
a
small
fund
as
well
too,
and
you
can
see
the
retiree
Health
funds
there
as
well
cash
flow.
This
is
something
we
bring
up
every
year
and
representative
de
Plessy
former
chair
here.
K
This
is
a
question
you
brought
up
over
the
years
many
many
times
and
we've
discussed
it
and
one
of
the
things
in
years
past
was
how
can
we
figure
out
whether
cash
flow
is
good
or
bad,
and
so
we
went
to
the
actuaries
at
that
time
and
said:
what's
a
good
way
to
look
at
this,
and
so
we
kind
of
work
through
a
process
to
calculate
a
percentage
and
basically
you'll
see
that
net
cash
flow
up
there,
contributions
minus
benefits
and
expenses
and
then
looking
at
that
in
comparison
to
their
assets
at
the
beginning
of
the
year.
K
So
there's
you
notice,
there's
no
investment
income
in
there,
there's
no
gain
on
assets,
and
so
the
question
is,
you
know:
are
you
cash
flowing
you
know
and
when
you,
when
you
calculate
that
as
a
percentage,
they
kind
of
talked
about
that
three
to
five
percent
was
a
was
a
was
an
okay
range?
If
you
will
all
right
now,
that
would
vary
based
upon
where
your
plan
Health,
was
what
what
your
goals
are
right,
but
they
kind
of
talked
about
on
average.
K
Three
to
five
percent
was
a
number
that
that
would
look
that
would
look
okay
and
so
we've
calculated
those
numbers
here
and
we've
done
this
each
year
and
you'll
see
that
chart
down
at
the
bottom.
You'll
see
cash,
the
CF
as
a
percentage
of
assets.
That's
cash
flow
as
a
percentage
of
assets,
all
right.
So
again,
that's
without
investment
return.
K
So
in
kers,
non-hairs
you'll
see
that
it's
a
positive
3.06
percent,
which
means
there's
more
contributions
coming
in
then
there
are
benefits
and
expenses
going
out.
The
door
and
I
do
have
to
note
House
Bill
8,
because
we're
getting
contributions,
steady
level
of
contributions
and
certainly
the
quasis-
are
paying
their
full
part
of
that.
That's
a
positive
number,
and
certainly
that's
been
positive,
but
you
can
see
down
below
there
with
the
2021
value
was
a
point,
eight
percent.
That
value
has
improved
assets.
K
Growth
helps
too,
but
but
that
that
number
is
is
positive
and
then
fund.
The
16.8
percent
funded
cash
flow
is
kind
of
the
devil
at
the
door.
If
you
will
right,
that's,
what's
going
to
build
your
asset
pull
up
and
you
can
kind
of
see
the
funds
as
we
go
along
there.
Sprs
has
this
really
great
number,
and
that
includes
that
215
million
dollars
of
additional
Appropriations
that
they
got.
If
we
were
to
adjust
that
and
take
out
that
250
million
dollars,
it
still
would
have
been
positive
at
0.67
TRS.
You
do.
K
You
do
see
some
improvement
this
year,
but
that
also
included
those
green
box
dollars
that
were
paid
off.
So
it's
at
1.17
percent
below
that
three
to
five.
K
If
the
green
box
dollars
were
not
included,
that
would
be
at
3.02
percent
and
certainly,
as
we
kind
of
move
across
I
do
do
need
to
note.
Legislative
retirement
plan
is
not
receiving
any
employer
contributions.
So
it's
as
we've
had
those
discussions
before
just
a
quick
special
topic
on
assumed
rates
of
return.
We
kind
of
bring
this
up
every
year,
but
this
is
a
trend
that
keeps
changing
and
it
seems
to
be
changing
by
the
moment.
It's
a
little
confusing.
K
But
if
you
were
look
far
left
on
this
chart
in
2001,
where
that
zero
one
is,
you
could
see
where
public
Pension
funds
were
as
far
as
assumed
investment
returns,
and
you
can
see
that
most
everybody
had
an
eight
percent
or
above
assumed
rate
of
return.
This
this
the
average
was
eight
percent
as
we
scroll
across
and
then
particularly
over
the
last
10
years.
K
There's
been
a
pretty
dramatic
shift
and
we're
now
at
a
you,
know
a
median
average
of
6.94
percent,
and
if
you
look
at
that
far
right
and
for
physical
year,
23
there's
no
one
above
eight
percent
anymore,
whereas
it
used
to
be
the
commonplace
assumption.
If
you
will,
and
in
looking
at
funds
over
the
last
We've
looked
at
each
of
the
state
funds,
several
of
them
are
still
phasing
in
I.
K
Think
you're
going
to
continue
to
see
this
trend,
These
funds
to
come
down,
part
of
that's
what
their
expectations
are
as
far
as
returns
are,
but
it
also
impacts
cash
flow
and
things
like
you
know,
funding
levels,
because
if
you
need
more
contributions,
that
assumed
rate
of
return
is
also
your
discount
rate
on
liabilities.
And
so
when
you
drop
that
unfunded,
like
you
know,
liabilities
go
up.
Unfunded
liabilities
go
up.
Contributions
go
up,
so
it's
not
just
an
asset
side
of
the
equation
number,
because
the
two
are
generally
tied
together
in
public
Pension
funds.
K
I'm
not
going
to
do
the
due
to
time.
We
can
certainly
talk
about
it,
but
these
are
some
basic
things
that
we
have
to
go
over.
You
know
we
try
to
look
at
their
investment
policies.
You
know
have
they
had
any
Securities
litigation
recoveries,
their
benchmarks?
You
know
we
they're.
Your
benchmarks
are
here
for
them
to
look
they're
generally,
all
using
they're
using
standardized
type
benchmarks
to
compare
their
returns,
certainly
and
Dave
kind
of
talked
to
this
about
asset
allocations
and
targets.
K
The
boards
establish,
what's
their
targeted
asset
allocation,
how
much
do
they
want
public
equities
or
fixed
income?
And
then
what's
their
allowable
range?
I
mean
one
of
the
things
we've
talked
about
here
is
where
kppa
has
had
some
issues
with
cash
coming
into
the
fund
and
being
outside
of
allowable
ranges.
The
values
as
of
630
are
listed
here.
Trs
had
a
slight
overweight
to
Alternative
or
above
the
range,
but
I
will
say:
kppa
has
had
some
a
shift.
They
are
moving
these
numbers
more
towards
the
allowable
ranges.
As
of
9
30..
H
Really
don't
have
a
question
Mr
chairman,
thank
you
for
letting
me
speak,
but
I
do
want
to
address
just
the
whole
cash
flow
thing
that
that
Brad
brought
up,
and
thank
you
Brad
for
this
is
always
detailed
report.
H
H
In
way.
That's
all
three
are
doing
the
same
reportings
format
and
and
in
data
that
we
can
digest
and
I
think
that
the
way
that
Brad
presented
this
cash
flow
as
a
percent
would
be
a
good
way
for
us
to
start
Trend
it's
one
of
the
things.
H
They
should
be
reporting
all
three
systems
to
us
so
that
we
can
see
that
cash
flow,
because
it's
important
we
need
to
see
it
with
and
without
what
the
monies
are
that
the
state
is
providing,
because
it
obviously
makes
a
pretty
big
difference
so
again,
I'm
just
making
a
comment
to
the
board.
I
think
that
was
an
important
thing
that
we
shouldn't
lose
sight
of
and
should
add
that
to
our
record
reporting
requirements.
Thank
you.
Mr
chairman.