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From YouTube: Public Pension Oversight Board 6-24-21
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A
Well,
good
afternoon,
welcome
to
the
ppob
meeting
looks
like
we
have
a
quorum.
Madam
clerk,
would
you
please
call
the
roll
senator.
A
B
A
A
A
Bo
introduce
yourself
for
the
record.
Please
and
I
will
let
you
get
we'll
get
started
I'll,
probably
make
a
comment
or
two
and
and
you
can
get
started.
D
There
we
go
yes
good
afternoon,
everyone,
I'm
bo
barnes,
I
serve
in
the
positions
of
a
deputy
executive
secretary
and
general
counsel
for
the
teachers
retirement
system.
Kentucky
I've
been
asked
today
to
make
a
presentation
on
the
experience
study
that
was
recently
completed
by
the
trs
actuary.
D
I
have
a
powerpoint
presentation
that
I'm
going
to
present
and
certainly
welcome
any
questions
that
members
of
this
board
may
have
regarding
this
and
I'll
do
my
best
to
answer
those
questions.
A
Thank
you
bo
and
again
welcome
and
appreciate
you
being
here
today
and,
and
we
will
have
a
lot
of
discussion
on
this-
I
I
watched
the
meeting
you
had
monday
and
a
couple
couple
of
items
of
good
news
came
out
of
that.
Your
return
on
investments
are
very
good
and
applaud
you
for
that.
Also,
the
fact
that
the
experienced
study
came
back
at
around
300
million
additional
dollars
that
we
would
have
to
pay
instead
of
500
million.
A
That
was
certainly
positive
and
and
the
longevity
tables
that
you
know
people
are
living
longer,
even
though
it
costs
us
more
money.
That
is
a
good
thing
that
that
life
expectancy
is
going
up
in
in
certain
segments
of
the
of
the
population.
A
The
you
know
that
additional
money
is
if,
if
all
if
it
comes
all
at
one
time,
is
a
very
heavy
lift.
I
know
mr
harbin
made
the
comment
that
it
shouldn't
be
a
heavy
lift
or
any
big
deal
to
the
general
assembly
for
the
additional
money.
But
you
know
it's
anytime,
you
ask
the
general
assembly
for
additional
money.
A
It
is
a
heavy
lift
and
especially
when
we
look
at
the
300
million
that
that
could
be
plus
you
know,
I
don't
know
exactly
what
the
step
up
is,
but
you
know
over
the
years
the
last
three
or
four
years
seems
like
every
year
we
step
up
about
50
million
dollars
last
year
in
the
budget
for
the
20
21
22,
the
ask
was
579
million
and
when
we
made
that
payment,
I
think
your
ass
already
out
for
next
year,
629
million
again
a
a
sizable
increase
in
the
ask
and
a
sizable
increase
in
experience
study.
A
So
I
just
I
did
want
to
make
those
comments.
Also
one
thing
too
that
this
committee
ought
to
be
ought
to
consider.
Of
course,
we'll
have
to
leadership.
We'll
have
to
approve
it,
but
in
the
bill
that
we
passed
that
created
the
ppob
committee,
there's
as
7a
0.250
anyway,
there's
a
section
in
there
that
says
that
we,
we
may
guess,
hire
an
auditing
firm
to
audit
the
state,
administer
administrated
retirement
system
to
evaluate
the
reliability
of
each
system's
actuarial
assumptions
and
methods.
A
So
that's
not
just
trs
bo,
it's
it's
all
the
system.
So
members
need
to
make
a
note
of
that
and
and
like
I
said,
we
will
be
addressing
that
at
some
later
date
again
we'll
had
to
those
there
is
an
expense
to
that.
It's
not
free,
so
we
need
to
get
approval
before
we
proceed
on
that.
So,
mr
barnes,
the
floor
is
yours
and
thank
you
for
being
here.
D
Whoops
I
apologize
there,
we
go.
Thank
you
again,
mr
chair
and
members
of
the
this
board
pleasure
to
be
here
and
to
present
to
you.
The
experience
study
have
this
powerpoint
and
again
certainly
be
willing
happy
to
take
any
and
welcome
any
questions.
The
board
may
have
I'd
like
to
begin
with.
Just
as
a
refresher,
you
know
and
a
reminder.
You
know
what
what
an
experience
study
is,
and
so
an
experienced
study
is
a
standard
practice
by
actuaries
across
the
nation
in
evaluating
assumptions
that
they
have
projected
for
retirement
systems.
D
So
it's
a
common
practice
and
it's
a
valuable
tool
for
retirement
systems
and
I'm
say
they're
evaluating
projected
assumptions
and
using
the
word
projected
is
because
these
assumptions
are
forward-looking,
they're
looking
into
the
future
and
trying
to
predict-
and
you
know,
using
statistical,
modeling
and
probability
to
try
to
predict
what's
going
to
happen,
and
so
no
one
has
a
crystal
ball.
We
don't
know
for
sure,
what's
going
to
happen
and
that's
why
these
periodic
evaluations,
which
typically
lead
to
some
modifications
in
these
assumptions
along
the
way,
that's
why
these
occur?
D
Okay
and
that's
why
these
are
necessary.
The
assumptions
are
reviewed
and
you'll
see
this
in
the
powerpoint,
but
they
include
such
things
as
investment
rate
of
return,
mortality
rates
of
retirement
and
they're
important,
and
they
help
the
retirement
system.
D
They
are
looked
at
every
single
year,
because
every
single
year
the
actuary
looks
at
what
they
had
projected
and
what
actually
happened
for
that
year.
All
these
assumptions
and
they
publish
something
called
evaluate
an
annual
valuation
annual
evaluation.
Those
are
on
the
tr's
website
and
part
of
that
annual
evaluation
that
they
do
includes
a
gains
loss
analysis.
You
know
how
did
what
they
projected
versus
what
actually
happened,
shake
up,
how
they
compare
and
based
on
that
they
will.
They
make
adjustments.
D
D
Now
the
experience
study
we're
not
looking
back
just
one
year,
of
course
we're
looking
back
five
years,
and
you
know
it's.
A
five-year
period
is
a
relatively
short
period
of
time.
Five
years
versus
these
assumptions,
which
are
long-term
assumptions,
say
30
years.
So
because
of
that
we
know
these
are
short-term
periods,
we're
examining
five
years,
and
these
are
long-term
assumptions,
as
are
actually
noted.
In
its
experience
study,
we
don't
overreact.
D
D
They
thought
that
our
teachers
would
live
to
this
age,
but
for
that
five
year
period,
just
those
five
years
they
lived
to
this
age,
so
the
actor
was
looking
at
it
because
they
are
conservative.
They
didn't
lower
the
mortality
assumption
all
the
way
down
to
what
they
actually
saw
for
those
five
years
from
2001
to
2015..
D
They
lowered
it
a
little
bit
because
they
know
the
next
five
years.
Things
can
change
and
they
do
change.
So
it's
the
approach
is
conservative,
methodical
you're,
making
little
adjustments
here
to
the
left
or
to
the
right
all
along
the
way
over
that
period
of
time
that
that
we
were
trying
to
pay
off
this
unfunded
liability.
D
The
one
more
thing
I'd
like
to,
I
guess
note
about
what
experience
studies
are
and
representative
tipton
kind
of
brought
this
up
at
the
last
meeting,
and
that
is
he
asked
if
you
know
these
things
look
forward
towards
trends
like
investments
and
they
do
so.
It's
not
just
a
look
back
these
actuaries.
D
They
collect
and
analyze
data
from
a
lot
of
sources,
including
you
know,
entities
in
the
private
sector,
and
you
know,
consultants
out
there
in
the
investment
financial
world
and
from
federal
government
sources
as
well.
You
know
what
was
the
federal
government
saying
about
things
like
you
know:
inflation
and
those
sort
of
things.
So
a
lot
goes
into
these
studies.
D
D
D
There's
been
a
lot
of
interest
more
interest
than
I've
ever
seen
in
the
experience,
and
understandably
so,
in
this
particular
experience
study.
So
we
were
asked,
you
know
if
this
could
be
expedite
a
little
bit,
and
so
we
talked
to
our
actuaries
and
we
wanted
to
accommodate
those
requests.
So
we
we
have
an
experienced
study
that
we
have
now
today
before
the
close
of
the
fiscal
year,
which
is
sort
of
atypical,
but
what
it
does
mean.
D
We
have
some
important
information
to
share
with
this
board
today,
but
what
it
does
mean
is
that,
because
we
are
still
in
the
current
fiscal
year
and
we've
not
come
to
the
close
of
it,
you
know
there's
going.
The
information
is
incomplete
for
this
fiscal
year
and
there's
data
that
we
don't
have
today
that
we'd
have
normally
with
experienced
studies.
But
again,
we've
got
some
important
information
to
share
with
this
board
today.
Nonetheless,
so
what
can
I
tell
you
today?
D
I'm
going
to
tell
you
today
about
what
the
the
assumptions
are
that
the
actuary
established
in
our
statute,
the
actually
establishes
these
assumptions
for
the
board,
that's
their
business
of
what
they
do
and
our
board
ratifies.
This
is
a
formal
ratification
process
and
that
now
becomes
part
of
our
assumptions
for
the
next
five
years.
Until
the
next
experience
study
and
those
were
first
incorporated
in
the
fiscal
year,
2021
evaluation
annual
evaluation,
the
period
of
time
that
we're
in
right
now
but
not
yet
concluded.
So
that's
what
I
can
tell
you.
D
What
I
can't
tell
you
with
today
is
you
know,
because
these
assumptions
are
really
the
first
time
they're
going
to
take
effect
or
have
impact
on
the
budget
is
for
fiscal
year,
24.!
Okay,
as
senator
higdon
said
we
have
already.
We
have
the
number
the
budget
request
for
fiscal
year,
23
at
629,
29
million
dollars
additional
funding,
and
that
is
based
on
the
valuation
for
fiscal
year
2020
last
year.
D
So
we
have
that,
and
that
is
ready,
but
we
don't
have
the
current
valuation
for
2021
yet
because
the
year
has
not
concluded
that's
so
that
valuation
is
in
past
years.
Is
you
know
it's
presented
at
some
time
in
november?
Okay,
and
that's
when
we
have
greater
certainty
about
what
the
numbers
are
going
to
be,
we
do
and
we
do
after
the
close
of
the
fiscal
year.
We
have
employer
reports
in
from
all
the
districts
and
all
this
other
information
from
the
close
of
the
fiscal
year.
We
do
provide
estimates
of
future
budget.
D
Future
budget
request,
okay,
and
we
will
do
that
for
2024
and
that
estimate
of
the
budget
request
for
2024,
which
is
again
the
first
year.
These
assumptions
will
impact
that
will
be
made
available
to
this
body
as
soon
as
they
are
available
and
then,
furthermore,
after
we
get
the
annual
evaluation
completed
for
2021,
upon
which
the
budget
request
for
fiscal
year,
2024
will
be
made,
we
will
make
will
provide
the
the
actual
final
number
to
this
body
as
soon
as
that
is
available.
D
So
that's
that's
one
thing,
that's
different
with
here
the
timing.
There's
something
else
there.
A
couple
more
things
are
really
unique.
This
the
timing
of
this
particular
experience
study
one
is
again
as
senator
higdon
noted
investments
were
really
really
exceptional
this
year
and
I
reported
on
those
at
the
last
public
pension
oversight
board
meeting.
You
know
for
the
first
nine
months,
the
first
three
quarters
of
the
current
fiscal
year
were
end
for
the
period
ending
march
30th
of
this
year.
D
Our
returns
were
over
20
percent
in
nine
months
we
added
just
to
the
pension
fund.
I've
got
some
numbers,
I'm
going
to
show
you
later,
but
we
added
just
to
the
pension
fund
four
billion
dollars
in
additional
assets
in
nine
months.
That
is
exceptional
okay.
So
this
experience
study
because
we're
completing
this
before
the
close
of
this
fiscal
year.
It
does
not
take
into
account
the
exceptional
gain
in
assets
that
we
have
had
over
this
past
year.
D
It's
not
included
it's
not
it's
considered,
but
those
gain
and
assets
are
are
very
important
in
respect
to
one
thing
that
the
experience
study
noted-
and
there
is
a
discussion
in
the
experience
study
about
what
some
states
are
doing
and
it's
a
sort
of
a
newer
trend,
but
what
some
states
are
starting
to
do
in
a
growing
trend
with
assumption
changes
and
talking
about
states
like
georgia,
mississippi
you've
got
north
carolina
and
then
there's
several
others
too,
but
just
to
name
a
few
I
think
on
top
of
my
head.
D
They
are
finding
ways
to
phase
in
changes
to
assumptions.
Particularly
investment
rate
return
assumption,
okay.
So,
instead
of
having
that
all
at
once
a
more
methodical,
measured
manner,
they
will
do
that
over
a
period
of
time,
five
years,
for
example.
So,
given
that
we
had
even
nine
months
into
this
year,
four
billion
dollar
gain
in
assets.
D
D
The
states
with
you
know,
conservative
funding
plans
are
doing
this,
that
that
is
something
that
I
think
this
will
be
part
of
this
eventually,
if
part
of
the
budget
process.
So
I
just
don't
have
that
information
today,
but
again,
all
of
this
will
be
made
available
to
this
board
as
soon
as
it
is
possible.
D
Something
else
that
is
just
very
unique
about
the
timing
of
this
experience
study
is
that
this
body,
the
general
assembly
enacted
house
bill
258
this
past
session,
and
then
that
is
the
bill
that
establishes
a
new
retirement
tier
for
trs,
specifically
for
individuals
who
become
members
of
the
retirement
system,
on
or
after
january,
1st
2022
they're
going
to
be
in
a
new
tier
and
the
most
significant
thing
about
that
new
tier
and
it
is
a
sea
change
in
how
retirement
benefits
are
going
to
be
provided
for
this
new
tier.
D
In
that
the
commonwealth
is
ending
responsibility
for
future
unfunded
liabilities
that
could
arise
from
these
new
tier
members.
Okay,
it
ends
january
1st
2022.
They
will
have
no
further
responsibility
for
new
members
coming
in,
and
you
know
the
commonwealth
is,
if
you
will
they're
getting
out
of
the
business
of
being
an
unfunded
liability
business.
Okay,
with
this
new
legislation,
this
landmark
legislation
I'd
even
call
it
that
was
enacted
just
in
this
session.
D
There
is
there's
a
funding
plan
in
place
and
and
and
retirement
system
staff-
and
I
know
teachers
are
all
very
thankful
about
the
additional
funding
that
we
are
now
getting
for
the
tr,
the
full
funding
that
trs
is
getting
for
the
pension
and
that
with
that
full
funding,
we
are
enacting
this
funding
plan
with
this.
Full
funding
is
highly
significant.
It's
of
greatest
importance
in
helping
us
achieve
the
returns
where
we
had
a
four
billion
dollar
increase
from
investments.
D
You
know
returns
over
the
first
nine
months
and
we
have
by
putting
this
funding
plan
in
place,
which
was
initially
a
30-year
amortization
period
to
pay
off
the
infant
liability
we're
down
to
about
24
years
now
so
24
years
from
now,
whatever
number
of
members
are
left
in
the
current
plan
and
there
will
be
a
lot
fewer,
obviously,
because
there
are
going
to
be
retirements
between
now
and
the
next
24
years,
maybe
fewer
and
fewer
and
fewer
and
there'll
be
more
in
the
new
tier
each
year.
D
You
know
we
will
eventually
have
that
will
be
100
funded
and
for
those
who
are
still
in
the
current
tier,
the
cost
to
the
commonwealth
that
we
will
build.
Today's
dollars
would
be
slightly
less
than
social
security,
so
you
know
there's
a
lot
of
things
that
are
different
about
this
timing
of
this
one,
and-
and
this
experience
study
does
not
you
know
it
does
not
include-
does
not
account
for
that
sort
of
change.
That.
A
B
Sir
wilson,
thank
you,
mr
chairman
and
bo
thank
you
for
being
here
today
and
was
looking
at
some
of
this
already
my
question.
I
know
that
it's
mentioned
the
629
million.
That's
additional
funding
that
has
already
been
determined
for
2023.
B
D
So
the
13
is
almost
500
million
dollars
a
year
that
that
reflects
both
pension
and
medical,
the
13-105.
Okay,
you
know.
D
Yes,
sir,
that
that
is
the
additional
funding
that
is
needed
to
make
sure
that
that
funding
plan
is
implemented
to
pay
off
the
existing
legacy.
Infinite
liability
over
24
years
that
13
105
percent
and
0.75
of
that
is
medical.
That's
actually
more
than
what
we
need
to
pay
would
be
the
normal
cost.
If
we
didn't
have
an
unfunded
liability,
we're
getting
more
than
from
normal
costs,
but
it's
not
enough
to
pay
off
his
unfunded
liability
over
a
30-year
period
now,
24
years
remaining
so.
A
D
A
B
So,
in
effect
it
to
really
fully
fund
it,
it
takes
1.12
billion
dollars
is
what.
B
Okay
and
just
the
last
thing
you
already
mentioned
the
the
new
tier
in
hb
258,
and
so
as
far
as
we
know,
that
was
not.
There
was
no
impact
that
was
taken
into
account
for
this
particular
experience.
Study
for
that
new
tier,
that's,
correct!
Okay,
thank
you.
A
A
Okay,
okay,
so
we
got
to
we
we've
we
have
the
the
arc
and
then
we
have
the
the
the
normal
cost
and
then
the
green
box.
What
other?
What
other
supplemental
monies
are
we
sending
to
trs.
D
D
And
well,
let
me
I'll
come
back
to
a
second,
where
we
increase
the
cost
of
living
adjustment,
and
we
only
did
that
if
there's
funding
in
budget
for
it,
so
that
hasn't
happened
since
2008
and
the
commonwealth.
Instead
of
paying
that
and
lump
sum,
they
were
paying
that
on
an
amortized
basis
over
20
years.
So
we
still
have
a
little
bit
of
that
left.
D
But
you
know
those
old
colas
are
those
adjustments
to
old
colors,
you
know
increasing
them
and
the
payments
for
those
those
installment
payments
are
going
away
or
fading
out,
and
so
those
will
eventually
soon
very
shortly
be
gone
completely
and
again.
We
we
haven't
provided
any
coals
above
the
1.5.
Unless
there
was
funding
to
pay
for
it
also,
including
the
green
box.
There
might
be
one
more
year
that
is
in
early
2000's.
D
The
general
assembly
was
looking
at
the
retirement
allowance
of
some
of
our
teachers,
who
retired
a
long
long
time
ago,
and
their
salaries
were
so
low
back
then,
and
coalesce
hadn't
kept
up
their
retirements
that
they
provided
a
minimum
benefit.
I
think
it's
440
dollars
a
month
or
or
40
45
per
year
of
service.
You
know
guaranteed,
and
that
was
really
just
to
kind
of
get
those
folks
above
the
poverty
level
and
it
and
thinking
about
that
629
9
million
and
I'm
seeing
the
budget
spreadsheet
right
now.
My
mind's
on
again,
I
apologize.
D
I
don't
have
that
with
me,
but
I
think
that's
6
29,
that
is
the
all-in
figure
for
the
additional
and
would
include
I'm
pretty
sure
the
supplemental
requirements
as
well,
because
that's
a
line
item
that
that
captures
everything
really
pretty
much
outside
of.
What's
going
on
with
the
seek
formula,
the
other,
that's
the
other
big
part,
that's
if.
A
D
A
To
see
what,
because
it's
been
a
long
time
since
we
had
a
green
box
discussion,
that's
that's
another.
One
of
those
things
is
clears.
You
know
it's
recallable,
nickels
and
some
other
things
around
here.
It's
prevailing
or.
D
I
can
provide
today
that
those
green
box
dollars
or
a
lot
of
those
installment
streams,
are
running
out
the
old
colas
adjustments,
the
old
minimum
benefit
values.
You
know
to
get
people's
those
teachers
for
a
long
time,
get
their
time
allowances
up
so
that
pretty
much
all
we'll
be
left
with
with
greenbox
dollars.
Here
very
shortly
is
going
to
be
sick
leave.
D
D
Okay,
so
this
is
high
level
highlights
okay
of
of
what's
going
on,
and
these
are.
There
are
a
lot
of
assumptions
and
a
lot
of
things
that
change,
but
these
are
the
biggest
ones
you'll
see
at
the
top
there.
The
investment
return
assumption
is
reduced
for
all
plans,
pension
and
health
insurance
to
7.1
percent,
okay
for
pension
that
had
been
seven
and
a
half
percent,
so
we're
moving
down
to
a
7.1
percent
rate
of
return
on
investments,
and
I
have
some
more
slides
to
follow
up
on
that
here.
Shortly.
D
Talk
about
investments,
lowering
the
payroll
growth
assumption
to
2.75,
as
this
body
knows
that
that
has
been
three
and
a
half
percent
is
being
lowered
now
to
2.75.
This
is
the
second
experienced
study,
consecutive
experience,
study
that
has
lowered
the
payroll
growth
assumption
and
then
also
you
see
the
third
bullet
point.
There
is
updating
to
new
teacher,
specific
mortality
tables
and
then
that's
something
that
chair
higdon
talked
about.
You
know
at
the
beginning
too,
so
actuaries
were
using
kind
of
general
population.
D
They
won't
be
what
we're
going
to
see
here
today,
they'll
they,
because
we've
adjusted
for
we're
covering
just
teachers,
something
else
that
they're
doing
with
these
new
mortality
tables
is
they're.
Looking
at
a
teacher
today
who,
for
example,
is
60
years
old
and
they
are
projecting
with
these
new
mortality
tables
that
they
will
live
to
xh,
but
for
a
teacher
who
is
20,
for
example,
21
just
starting
out.
Let's
say
they
are
projecting
an
even
extended
life
span.
D
A
Oh
representative
miller
has
a
question.
B
Yes,
sir
hello
bo,
thank
you
for
the
information
on
this
slide
are
the
first
two
economic
assumptions
and
the
last
one,
a
demographic,
because
I
know
in
the
cadmax
study
they
segmented.
These
are
the
economic
issues.
These
are
the
demographic
issues.
Am
I
correct
on
that.
D
B
D
B
It
is,
I
have
those
two
correct
and
in
terms
of
order
of
magnitude,
could
you
put
an
order
of
magnitude
on?
Are
those
listed
in
fiscal
impact.
D
Order,
yes,
sir,
I
have
a
a
slide.
That's
coming
up
that
will
show
the
impact
of
these
on
the
thank
you.
A
Well,
can
I
ask
you
on
on
the
payroll
growth
I
think
last
several
years
it's
been
payroll.
Growth
has
hovered
around
one
percent
so
and
we
they've
set
the
assumption
at
two
two
and
three
quarters:
can
you
explain
how
they
come
up
with?
What's
that
number.
D
It's
it
has
payroll
growth,
since
the
great
recession
in
2008
has
been
low.
Clearly,
you
know
in
periods
before
that
you
could
see
some
very
strong
payroll
growth
for
teachers
in
kentucky,
and
this
is
what
payroll
growth
is.
This
is
specific
to
teachers,
okay
and
payroll
growth.
It's
total
payroll,
okay,
it's
not
individual
salaries.
It's
total
payroll
and
total
payroll
can
grow
two
ways.
D
Increasing
the
number
of
teachers
and-
or
you
know
increasing-
you
know,
raises
generally
across
the
board
for
these
teachers.
Those
are
two
ways
you
can
see:
payroll
growth,
and
this
is
a
long-term
assumption.
It's
not
five
years,
it's
not
10
years.
This
is
like
a
30-year
assumption.
D
Number
payroll
growth
and
most
of
that
assumed
payroll
growth,
2.5
percent
of
that
2.75
percent
and
the
current
assumption
is
inflation
and
inflation,
like
teacher
payroll,
has
been
low
since
2008
9.,
the
great
recession,
and
again
no
one
has
a
crystal
ball,
but
this
inflation
rate
of
two
and
a
half
percent
is
in
line
with
what
the
actuary
for
the
social
security
administration
is
predicted
and
other
public
and
private
entities
are
predicting
it's
within
the
range
of
where
we
they
see
an
inflation
going
forward.
D
I
don't
know-
and
again
I
said
last
time-
I'm
not
an
economist
but
certainly
you're.
Seeing
a
lot
of
reports
today
about
there
being
pressures
on
inflation
going
up
and
whether
that's
long-term
or
short-term
seems
to
be
a
matter
of
debate
right
now,
and
I
certainly
don't
know,
but
I
think,
because
they
not
only
look
in
the
past
these
actuaries
with
experienced
studies
that
are
also
looking
forward
to
what's
going
on
in
the
future.
D
Let's
see
this
shows
this
chart
comes
from
a
survey
that
is,
that
was
conducted
by
the
national
association
of
state
retirement
administrators
and
that's
a
you
know,
that's
a
large
non-profit
organization
that
public
pension
plans
belong
to
and
a
lot
of
public
pension
plans
most
and
they
do
a
survey
of
plans
of
large
plans
just
to
see
what
their
assumed
investment
returns
are,
and
you
can
see
that
most
are
at
seven
percent
at
37
and
the
second
most
are
seven
percent
to
7.5
percent
at
36..
D
So
with
7-1
you
know
we
feel,
like
that's
a
conservative.
You
know
measure
being
right
there,
an
average
of
all
these
plans.
You
know,
particularly
you
know,
in
light
of
our
investment
performance.
You
know
we
are
an
above
average
investment
point.
We've
been
an
above
average
investment
performer
and
we're
putting
our
assumed
rate
of
return
very
conservatively
right
here,
sort
of
in
the
in
the
middle
of
the
other
public
pension.
D
Plans,
representative
miller,
this
gets
to
the
a
slide
that
you
were
talking
about.
That
shows
the
weight
of
the
impact
of
these
assumption
changes.
All
these
numbers
are
in
billions
and
so
I'll
say
what
they
are.
But
it's
you
see
at
the
very
top
total
liabilities
of
the
retirement
system.
You
know
are
we're
35.58
billion
as
of
june
30th,
2020,
okay
and
below
that
you
will
see
the
impact
of
those
assumption,
changes
that
the
actuary
looked
at
on
the
liabilities
and
starting
at
the
top
you'll
see
member
withdrawals.
D
So
that's
members
who
retire
before
getting
their
retirement
account
and
they
refund
their
contributions
when
they
do
that.
That's
a
positive
experience,
so
we
see
there's
a
70
million
dollar
increase
in
liabilities,
which
meant
there
were
fewer
people.
D
You
know,
for
example,
refunding
their
retirement
accounts
before
they're
eligible
to
retire
service,
retirements,
that
added
50
million
dollars
to
the
liabilities
and
again
you
know
we're
talking
about
long-term
liabilities
here
that
added
50
million
dollars.
Then
here
we
get
to
mortality
tables,
and
this
is
where
this
is
why
this
was
on
the
previous
page,
because
you
can
see
mortality
increased
the
out
liabilities
by
1.49
billion
dollars,
okay
below
mortality
tables,
you
see,
salary
changes
and
that's
a
decrease
in
liabilities
of
400
million
dollars.
D
Okay
and
the
reason
the
liabilities
decreased
by
400
million
dollars
is
when
you
lower
payroll
growth.
A
component
of
that
are
individual
salaries.
Okay,
so
they
had
projected
that
teacher
salaries
were
going
to
be
here,
but
they
are
now
saying
they're
going
to
be
lower
they're
going
to
be
less
based
on
what
they're.
D
Looking
at
you
know,
past
experience
and
when
you
lower
teacher
salaries
you
lower
the
retirement
benefits
that
are
going
to
be
paid
on
them,
because
teachers,
retirement
allowances
are
calculated
in
part
based
on
not
just
their
years
of
service
but
on
their
salaries.
So
lowering
salaries
lowers
benefits
and
therefore
lowers
liabilities.
D
Sick
leave,
sick
leave
was
increased
liabilities,
120
million
dollars,
lowering
the
it
says,
discount
factor
also,
you
know
that's
a
way
of
saying
you
know
the
assumed
rate
of
return
that
increased
liabilities
by
1.65
billion
dollars.
D
So
there
you
have
the
biggest
driver,
you
know
of
increased
liabilities
as
a
result
of
these
substance,
changes
followed
by
the
mortality
tables
at
1.49
billion
dollars
and,
and
then
the
net
result
is
that,
with
all
of
these
changes,
we
increased
a
lot,
those
liabilities
of
35.58
billion
to
2.95
billion,
and
again
not
all
this
is
due
now.
These
are
long-term
liabilities
that
we
have.
These
are
long-term
benefits,
we're
paying
out
over
decades.
D
D
These
things
do
change
and
we
make
measured
and
the
actuaries
make
measured
adjustments
based
on
those
changes,
if
also,
for
example,
about
how
these
things
might
change
if
trs
continues
to
earn
seven
and
a
half
percent
instead
of
seven
one
point
percent,
if
it
continues
to
perform
as
it
has
performed.
You
know
much
of
this.
Increased
liability
can
go
away.
Okay,.
B
I'm
from
thank
you,
mr
chairman
bo
question
on
the
mortality
tables.
Yes,.
D
B
Are
we
do
we
know
if
we
would
have
used
the
old
mortality
tables
or
the
old
way
of
looking
at
mortality
rates
as
a
suppose,
as
opposed
to
the
teacher
specific
mortality
rates?
What
this
number
would
be.
D
Oh
no
sir,
I
well
it's,
it
is
increasing.
D
Yes,
yes,
no,
it
would
be
so
what
you
see
here
is
a
this
is
an
increase
over
the
old
mortality
rates
of
liabilities
by
1.49
billion
dollars,
right
so
long-term
liabilities
increase
by
that
amount.
When
you
compare
these
new,
this
new
data
set
that
we
have
had
since
really
early
2019.
So
it's
something
new
and
the
first
experience,
so
we
could
have
used
it.
This
new
compared
to
the
old
results
in
an
increase
by
that
1.49
billion
dollars
in
liabilities.
B
D
No,
it
would
have
been
less
and-
and
I'm
sorry
if
I
understand
it,
but
the
question,
but
it's
the
it-
is
more
because
of
being
teacher
specific
okay.
B
B
Do
we
know
what
that
number
would
be
not
being
teacher
specific.
D
Yes,
because
the
the
old
number
was
the
general
population-
okay,
and
so
the
old
population
gave
us
lower
liabilities,
because
the
general
population
does
not
live
as
long
as
teachers.
They
they
tend
to
take
better
care
of
themselves.
They're
tend
to
be
conservative,
educated
go
to
the
doctor
when
they
need
to
and
and
and
take
their
medicine
and
all
that
stuff.
So
they
because
they
do
live
longer.
That's
why
we
see
the
1.49
billion
dollar
increase
in
liabilities.
D
No,
no
and
again
under
the
statute,
the
actuary
establishes
these
assumptions
and
our
board
has
more
of
just
a
formal
process
of
ratification.
Okay
to
formally
approve
these
assumptions
so
they're
established
and
our
board,
you
know
when
I
work
with
them
a
lot.
Obviously
they
are.
They
have
a
conservative
approach
to
things,
and
I
think
you
know
from
what
I
saw
the
meeting
and
you
know
watching
them
as
these
were
announced.
These
new
assumptions
were
announced.
D
I
think
they
see
it
as
staff
to
that
these
new
mortality
change
assumptions
where
we
now
have
data
after
years
of
collection
that
we
now
have
data
mortality
just
for
teach-specific
teachers.
That's
a
good
thing,
that's
a
useful
tool
to
help
us
better.
You
know,
define
liabilities,
and
so
we
welcome
it
and
I'm
sure
that
our
board
members,
every
single
one
of
them
welcome
having
this
additional
tool
as
well
and
again.
This
is
kind
of
a
one-off
thing,
because
you
know
this
is
not
something
that
normally
happens
with.
D
You
know
you
have
changes
in
mortality
based
on
you
know,
experience
and
you
know
a
general
population
trends,
but
now
we're
kind
of
stepped
it
up
a
little
bit
for
this
time.
You
know
next
time
we
won't
have
a
step
up,
because
there
won't
be
a
new.
You
know
change.
I
mean
we're
teacher
specific.
Now
we
can't
get
any
better
than
that.
As
far
as
really
you
know,
drilling
down
on
who
our
population
is
so
all
good
questions.
Thank
you.
A
Yes,
co-chair
de
plessy
has
a
has
a
question.
B
Thank
you,
chairman
bo.
Thank
you
for
your
presentation
so
far.
I
I
I
would
like
a
little
more
explanation.
You
maybe
gave
it.
I
didn't
hear
it
on
the
on
the
phone,
but
the
120
million
dollars
in
increased
liabilities
due
to
sick
leaves.
Can
you
explain
that
change?
Please.
D
When
our
the
actuary,
when
the
actuary
is
looking
at
experience,
they
really
really
drill
down
to
a
fine
level,
okay
and
so
with
sick
leave.
What
happened
this
time?
They
looked
looking
at
sick
leave
and
they
found
that
our
teachers,
who
are
retiring
with
sick
leave,
tend
to
be
the
higher
paid
teachers
or
higher
paid
members,
not
just
teachers,
but
you
know
administrators
and
the
other
folks
who
participate
in
trs.
The
people
who
have
the
sick
leave,
who
keep
their
sick
leave,
tend
to
be
in
the
higher
paid
positions.
B
So,
thank
you.
So
the
120
million
sick
leaves
how
much
of
that
is
due
to
what
we've
termed
spiking,
where
they're
saving
it
all
up
and
applying
it
in
a
year.
D
Well,
sick
leave:
you
know
all
of
sick
leave
accumulated
over.
B
B
The
fact
that
we've
had
a
change
in
as
120
million
tells
me
that
there's
a
change
in
the
trend
and
in
other
words,
that
educators
are
have
kind
of
found,
this
loophole
of
using
sick
leave
more
and
more
and
more
for
for
for
their
higher
higher
pension
payments
that
maybe
they
didn't
realize
they
had
20
years
ago,
and
that
that's
now
become
a
trend
and
more
and
more
this
is
going
to
keep
going
up,
is
more
and
more.
Take
advantage
of
this
loophole.
Is
that
a
fair
statement.
D
It
it
it
it
could
be.
You
know
it
could
be
a
good
there's
a
you
know,
there's
a
limit
there
in
that
you
know.
Teachers
do
have
to
use
sick
leave
day,
so
they
can't,
you
know,
keep
most
teachers.
I
mean
some
teacher.
A
teacher
who
doesn't
use
any
sick
leave
day
is
blessed,
but
you
know
most
teachers
are
going
to
have
to
use
sick
leave
days
and
there's
a
limit
in
how
many
sick
leave
days
they're
going
to
have
to
retirement,
but
I
guess
to
get
to
your
question.
D
This
is
anecdotal,
but
you
know
I
know,
and
I
hear
from
superintendents
and
other
administrators,
you
know
in
districts
and
other
employers
that
they
do
advise
their
teachers
about.
You
know
the
value
of
sick
leave
being
used
for
retirement
calculation
purposes
and
the
reason
that
they
do
that
is
they're
trying
to
discourage.
D
You
know
they're
telling
me
that
they're
trying
to
discourage
absenteeism
in
the
classroom-
and
they
think
by
you,
know
letting
them
know
that
this
can
be
used
not
just
that
they
get
paid
for
it
at
retirement
at
when
you
sick,
leave
at
30
their
daily
rate,
but
that,
additionally,
that
payment
can
be
used
for
retirement
calculation
purposes
that
they
seem
to
be
maybe
a
more
common
message,
maybe
from
superintendents
to
their
teaching
staff.
D
B
I
actually
I
had
one
question,
but
I'm
gonna
add
a
preface
to
it.
You've
mentioned
a
couple
of
times
about
whether
the
board
adopts
the
recommendation,
yes,
sir,
and
whether
it's
the
actuaries
recommendation
or
management's
recommendation.
What's
the
last
time,
the
board
didn't
accept
one
of
your
recommendations.
B
D
The
board
give
me
an
instance:
no,
no
and
the
board
will
be
presented,
not
just
the
evaluations.
You
know
the
evidence
are
the
assumptions
and
the
change
in
assumptions.
They
are
provided
the
reasons
they
are
for
and
again
I've
been
with
the
tribe
it'll
be
22
years
this
year
and
during
that
period
of
time
you
know
the
actuaries
have
come
back
with
very
measured.
D
Assumptions
that
are
well
within
you
know
ranges
either
from
other
what
other
pension
plans
are
doing
from
what,
for
example,
investment
consultants,
large
investment
consultants
are
saying
they're
coming
back
with
the
reasonable
recommendations
that
are
within
that
range,
and
then
they
are
making
adjustments
based
on
experience
and
anticipated
future
trends.
So
they've
had
a
conservative,
measured
approach
with
that
and
that's
what
the
board
has
seen.
That's
what
staff
have
seen
with
the
actuaries
and
then,
furthermore,
you
know
the
board
does
hire
another
actuary
to
review
those
assumptions
of
our
actuary.
D
That
was
last
done
for
the
fiscal
year
ending
june
30th,
2014
and
siegel
came
in
and
did
a
full
replication
audit.
That
means
they
look
at
all
the
actuarial.
You
know
assumptions
that
our
actuary
is
using
and
one
of
the
managing
partners
of
segal.
It
came
before
this
body.
It
was
you
know,
years
ago.
Obviously,
but
they
said
it
was.
You
know
one
of
the
cleanest
odds,
they've
seen
you
know.
That
was
almost
fully
lined
up.
D
You
know
with
with
what
they
projected
so
and
we
will
have
another
actuarial
audit
by
an
outside
independent,
actual
firm.
Looking
at
our
actuarial
firm
for
the
fiscal
year
ending
june
30th
2024.
follow-ups.
A
B
D
They
ask
us,
you
know
to
review,
for
example,
for
if
we
see
any
errors
you
know,
or
you
know
it
can
be
wording
whatever
we
review
it
like.
We
do,
you
know
actual
audits
and
those
sort
of
things
you
have
an
opportunity,
as
all
state
agencies
do
to
comment
and
say.
Well
we
think
this
this
number
here.
You
know
this,
this
payroll
number
or
this
this
particular
year's
contributions
or
payroll
that
was
reported
to
us.
You
know,
there's
a
typo
here
or
there's
a.
A
B
Started
out,
if
you
go
on
your
experience
study,
if
the
only
decrease
is
salary
changes,
but
that's
to
the
unfunded
liability,
if
I'm
not
wrong,
the
question
is:
what
is
the
impact
of
the
change
on
the
arc
on
an
ongoing
basis,
because
the
fact
that
we're
not
spreading
out
the
cost
over
3.5
or
3.25
percent
salary
increase?
It's
only
2.75
percent
salary
increase?
B
Do
you
know
the
impact
of
that
on
the
ongoing
arc
in
the
out
years?.
D
In
dollar
amounts
that
that's
where
we
get
into
that's,
where
I
have
some
uncertainty
because
we
haven't
closed
out
this
fiscal
year.
We
don't
have
the
201
variation
and
I've
got
a
chart
or
slide
that
I.
D
A
Bo,
I
do
have
a
one
more
question
for
you
before
you
started
and
it
I
might
be
jumping
around,
but
it's
the
assume
rate
of
return,
the
it
was
7.5
and
that
was
three
percent
inflation,
4.5
percent
real
real
return
and
the
assumption
changed,
you'd,
lower
the
inflation
rate
to
2.5
percent
and
increased
the
real
return
to
4.6.
D
Yes,
okay:
we've
there's
been
a
lot
of
analysis
done
on
this,
including
by
our
own
internal
investment
staff,
historic
analysis
on
inflation
and
you
know
real
return
and
we
feel
very,
very
comfortable
with
that.
Based
on
past
history,
going
back
going
back
to
the
20s.
D
So
this
was
for
the
retirement
annuity
trust
for
the
pension.
I
should
have
pointed
that
out
to
begin
with,
but
we
also
have
a
similar
slide
like
this,
for
the
health
insurance
trust,
and
that
is
the
next
slide
that
you
will
see
here
and
in
same
format
and
I'll
just
go
over
that
again.
You'll
see
that
the
total
liabilities
as
of
june
30th
2020
were
2.76
billion
dollars
and
then
below
that's
at
the
top
and
below
that
you
have
what
changes
and
assumptions
did
to
that.
D
Okay,
so
member
withdrawals
again,
that's
that's
people
leaving
the
system
before
the
eligible
to
retire.
Mostly,
you
see.
That's
a
10
million
dollar
increase
to
liabilities,
retirements,
10
million
dollar
increase.
This
is
for
that
five
year
period.
That
means
we
had
retirements
more
than
anticipated.
For
that
period
of
time.
I
can
say
that
for
last,
just
last
fiscal
year
and
for
this
fiscal
year
so
far,
retirements
are
really
down
like
the
lowest
in
20
years.
D
Okay,
so
again
for
the
next
five-year
experience
study,
these
retirements
could
look
different
mortality
tables
again,
as
you'd
expect
people
living
longer,
they're,
drawing
insurance
receiving
health
insurance
benefits.
Longer
an
increase
of
140
million
dollars,
salary
changes,
thirty
million
dollar;
I'm
sorry:
three
million
dollar
increase
member
participation.
D
Just
how
many
people
are
you
know
in
the
in
the
program
that
was
a
savings
of
three
million
dollars:
health
care
trends
like
medical
inflation,
130
million
dollars,
decrease
in
liability
and
then
lowering
the
discount
factor
or
the
assumed
rate
of
return
to
7.1
percent.
That's
320
billion
dollars
increase
in
liability.
So
at
the
end
you
have
an
increase
in
liabilities
for
the
health
insurance
trust
in
the
amount
of
350
million.
D
D
Here
it
gets
to
some
points
that
we've
kind
of
already
made,
but
just
highlight
again
and
then
again,
as
senator
higdon
pointed
at
the
very
beginning
of
this
meeting
next
budget,
you
know
the
general
assembly
will
convene
in
2022
to
work
on
the
budget
for
fiscals
years
23
and
24..
D
The
budget
request,
the
for
the
additional
funding
for
full
arc
or
adec
for
the
pension
fund
has
already
been
established
with
the
2020
valuation.
We
know
that
629.4
million
dollars.
We
know
that's
what
we're
going
to
ask
for
for
the
first
year
of
the
next
budget
fiscal
year,
2023
and
then
the
2024
budget
request
will
ultimately
decided
by
the
2021
valuation,
which
of
course,
we
haven't
completed
that
year.
Yet,
but
again,
we
will
make
both
the
estimate
and
the
final
budget
request
available
to
this
body
as
soon
as
possible.
D
This
shows,
you
know
again,
there's
things
going
on
this
experience
study,
that
of
timing
that
are
somewhat
unique,
and
this
is
one
of
them.
This
shows
returns
for
the
five-year
period.
D
That
was
subject
of
the
experience
study
and
you
can
see
the
years
on
the
far
left
and
the
middle
column
is
the
actual
value.
So
that's
the
five
year
smoothing.
What
would
those
returns
be?
What
are
those
returns
without
the
five-year
actual
smoothing,
which
is
what
actuaries
do
you
know
we're
not
mark-to-market
with
actual
return
assumptions
and
to
the
right?
You
see
the
actual
market
value
returns
and
those
are
the
ones.
D
You
know
that
I
report
here
periodically
to
the
system
on
a
quarterly
basis
to
the
board
on
a
quarterly
basis,
and
you
can
see
let's
go
to
the
next.
The
bottom
line
in
this
and
you
see,
2016
was
a
really
bad
year,
negative
one-
and
I
remember
coming
here
and
talking
about
that
and
how
there
was
particularly
one
quarter
or
maybe
two
where
value
stocks
really
really
underperformed.
You
know
that
year
doesn't
mean
they're
bad.
It
just
means
you
know.
No
asset
class
is
going
to
do
great.
D
Every
single
year
there
are
times
years
where
they're,
favored
and
usually
they're,
not
favored,
but
we're
looking
long-term.
So
we
want
long-term
results.
So
we
don't
get
too
worried
about
an
asset
class
underperforming
in
one
year.
Value
stocks
are
valuable,
they're,
an
important
part
of
our
investment
strategy
and
and
to
help
us
pay
these
benefits.
So
but
that's
happening
off
the
year
negative
one,
and
then
you
say
we
had
some
good
years:
15,
10.5,
5.6,
5.5,
and
with
this
evaluation
you
know
that
we're
going
to
be
doing
here
for
2021.
D
We
of
course
we're
going
to
roll
off
that
negative
one
percent
and
replace
it
with
what
ever
this
year
turns
out
to
be,
which
was
over
20
for
the
first
nine
months
of
this
current
fiscal
year,
so
that
you
know
that's
good
timing.
I
mean
that
could
help
with
what
we're
doing
with
our
budget
request,
and
this
is
just
a
little
more
data
on
on
what
happened
with
these
investment
gains.
D
The
top
is,
is
a
pension,
retirement,
duty,
trust
or
pension,
and
the
bottom
block
is
the
health
insurance
trust.
And
again
this
is
reflects
just
nine
months.
The
first
three
quarters
of
the
current
fiscal
year-
total
investment
gains
that
we
had
4.4
million
for
I'm
sorry
4.4
billion
dollars.
You
know
that
resulted.
D
Those
investment
gains
resulted
in
an
increase
in
plan
assets
for
the
pension,
trust
from
20.717
billion
dollars
to
24.742
billion
dollars.
So
that's
where
we
get
actually
well
over
four
billion
dollars,
increasing
gains
for
the
pension
fund
just
to
nine
months
below
that
block,
you
see
the
block
for
the
health
insurance
trust
again,
investment
gains
for
those
nine
months
of
367.4
million
dollars.
You
know
it's
a
smaller
trust.
D
It's
the
health
insurance,
not
the
pension,
but
significant
gains,
and
you
see
I
saw
an
increase
in
planned
assets
over
that
nine-month
period
from
1.616
billion
dollars
to
march
31st.
It
grew
to
2.126
billion
dollars,
so
you
know
strong
asset
gains
for
both
the
pension
and
the
health.
Insurance
trust.
A
Thank
you
bo.
You
got
through
that,
pretty
quick,
the
we
talk
about
the
mortality
tables
and
and
retirees
living
longer.
A
D
E
Thank
you,
mr
chairman.
I
do
have
a
few
questions
I'll
do
them
one
at
a
time
if
you
can
bear
with
me
bo,
I
want
to
refer
to
the
complete
executive
summary
on
page
seven,
so
you'll
have
a
reference
and
obviously
you've
talked
about
some
of
the
major
pension
assumptions.
But
there
are
other
assumptions:
yes,
sir,
they
go
into
the
calculation.
Yes,
sir,
and
specifically
on
the
top
of
page
seven.
E
It
refers
that
currently
there's
no
contribution
contribution
made
for
administrative
expenses
and
they've
calculated
that
projected
that
to
be
0.32
percent
and
the
recommendation
recommendation
was
that
this
would
be
added
to
the
total
normal
cost.
D
Yeah,
so
that
is
that
that
point
three
percent,
is
you
know,
what's
it's
going
to
be
a
small
number
we're
you
know
for
mexico?
Our
current
budget,
I
think,
is
16
million
dollars,
okay,
so
compared
to
the
sure
33
billion
dollars
in
liabilities.
You
know
it's
not
really
going
to
show
up
really
as
having
made
much
of
an
impact.
It
is.
It
is
added,
but
it
is
it's
just
I
don't
have
a
dollar
figure.
E
So
I
understand,
but
but
just
wanted
to
point
that
out
that
instead
of
the
system
absorbing
a
lost
on
administrative
costs,
it's
calculated
in
to
the
contribution
now,
mr
chair,
if
I
could
have
another
follow-up,
please-
and
this
is
digging
in
a
little
deeper
on
representative
duplessi's
question
about
the
the
sick
day,
credit
and
it's
referenced
here
on
the
bottom
paragraph
of
page
seven,
and
it
says
currently,
you
know
we
assume
a
two
percent
load
for
the
for
this.
E
E
D
E
Okay,
mr
chairman,
if
I
could
proceed
on
disability
retirement
I
read
into
this:
did
I
understand
correctly
that
there
is
a
recommendation
that
the
benefit
for
disability
requirement
will
be
reduced?
No
okay.
I
just
wanted
to
make
sure
I
thought
I
I
know
they
made
some
assumptions
on
there
I'm
reading
through
that.
I
want
to
make
sure
I
understand
that
correctly.
E
D
So
we
have
that
in
well,
I
don't
have
it's
a
very
small
number.
It
is
something
that
was
considered,
so
you
see
you're
just
the
changes
in
liabilities
on
the
retirement
annuity
trust
as.
D
These
assumptions
changes
had
we
had
disability
on
here
and
and
the
percentage
that
they
provide
would
be
zero
point
zero,
zero
because
that's
that's
small
foundation,
sure.
E
B
E
On
the
on
the
health
insurance
trust,
we're
lowering
the
assumed
rate
return
to
7.1
is
adding
200
200,
some
million
dollars
additional
liability.
I
know
we've
talked
in
the
past.
We've
projected
how
long
it
would
take
to
get
that
system
to
100
funded.
What
impact
will
this
have
on
getting
these
changes
have
on
us
on
getting
that
to
100
funded?
E
D
D
We
knew
there
were
going
to
be
changes
and
we
discussed
you
know
having
health
insurance
fully
funded
just
in
a
few
years.
You
know,
but
we're
going
to
push
that
out
a
few
years
with
a
lower
discount
rate
that
you'll
see
here.
D
E
Pass
the
baton
sandra
higdon
asks
a
question
later
about
greenbox
dollars,
other
things
that
are
funded.
I
was
not
here
in
2010,
but
I'm
referring
to
the
shared
responsibility
plan.
It's
my
understanding.
There
was
a
bond
taken
at
that
time.
Yes,
sir,
where
are
we
on
that
bond?
How
much
are
the
annual
payments
and
how
much
longer
are
we
subject
to
paying
on
that
bond?
Oh.
D
Boy
we
are,
we
are
getting
close
on
that,
because
that
there
were
three
bonds
issued.
Okay,
the
first
bond
was
issued
in
august
of
2010
469
million
dollars.
I
think
467
million
of
that
went
to
the
pension
to
the
general
assembly
was
helping
with
a
bad
situation.
You
make
the
contributions.
You
know
that
from
pension
to
medical,
but
they
repaid
that
in
full
with
that
bond.
D
Okay,
and
then
there
were
two
smaller
bonds
in
2011
and
2013,
just
to
help
provide
transitional
dollars
to
health
insurance,
trust
to
keep
benefits
paid
because
active
teacher
contributions,
retired
teacher
contributions,
additional
and
exclusive
contributions
were
phased
in
over
a
period
of
you
know,
six
years
so,
but
those
bonding
to
your
question
I
apologize.
Those
bonds
are,
I
think
it
was
a
10..
D
A
But
one
I
do
want
to
point
something
out:
that's
that
those
bonds
were
money,
that
the
general
assembly
borrowed
from
trs
to
pay
health
insurance
costs
and-
and
there
was
rumors
over
the
years
that
we,
I
guess,
took
money
from
teachers,
retirement
and
didn't
pay
it
back.
Yes,.
D
A
But
just
want
to
make
it
get
that
crystal
clear,
that
it
was
about
800
million
dollars,
and
the
good
thing
about
that
is.
Is
we
owed
you
money
when
the
market
crashed,
and
so
you
got
paid
back
with
good
money
instead
of
a
reduced
amount?
If
you,
if
they've
been
in
your
accounts,
it's
been
reduced
substantially,
so
I
just
want
to
make
sure
that
people
understood
that
we
did
pay
that
money
back.
We
we
bonded
that.
A
E
D
B
D
D
No
after
the
close
of
this
fiscal
year-
and
we
have
employee
reports
in
some
more
information
coming
in
for
this
fiscal
year,
we
will
be
able
to
provide
an
estimate,
as
we
always
do,
and
then
the
final
number
for
the
budget
will
be
provided
sometime
later
in
the
fall.
D
It
will
not
be
less
than
the
2023
request
how
much
greater
than
the
2023
request
is.
I
I
don't
know
again
that
depends
on
some
factors,
for
example
of
I
think
you
will
see
an
increase
because
of
the
valuation.
D
D
We
saw
that
you
know
there
were
about
2.9
billion
dollars,
increase
in
liabilities
with
these
assumption
changes,
so
we
had
four
billion
dollars
in
gains
for
the
first
nine
months
alone.
It
is
possible
that
the
investment
gains
from
this
year
alone
are
going
to
you
know
more
than
address
these.
D
Changes
and
the
question
I
have
is:
how
will
the
board
you
know,
with
assistance
from
the
actuary
decide
to
phase
in
those
gains?
So
that's
that's
a
question
mark,
so
very
it
could
go
up,
but
it
may
not
go
up
as
significantly
as
you
know
might
be
anticipated
correct.
I'm
just
trying
to
narrow.
D
C
On
the
payroll
growth
assumption,
I
think
we
had
2.75
and
I
think
you
gave
an
explanation
of
broad-based
inflation
and
comparisons
across
what's
happened
and
staying
track
with
what's
happening
across
the
country.
I'm
wondering
why
specific
information
to
kentucky
teacher
payroll
growth
wasn't
used.
Similarly,
like
was
taken
into
account
when
you
dealt
with
a
mortality
tables
rather
than
taking
broad-based
information.
You
made
it
teacher-specific
wondering
why
I
went
broad-based
the
exact
opposite
method
when
looking
at
payroll
growth,
okay,.
D
So
that's
a
good
question,
so
the
inflation
component
is
broad-based.
The
inflation
component
is
not
kentucky-based.
That
is
what
we
see
nationally:
no
with
inflation
and
that
inflation,
like
growing
a
comedy
council,
lists
all
boats
or
sinks
all
boats,
but
that's
what
we're
seeing
nationally.
Okay,
there
is
a
teacher
specific
component
to
that,
because
the
2.5
percent
of
that's
inflation
and
0.25
percent
of
that
is
real
wage
growth.
D
C
D
Well,
just
on
inflation,
you
know
it's,
we
experience
inflation.
Just
like
you
know
we
do
with
the
rest
of
the
country.
You
know
gasoline
prices,
you
know
fuel
prices,
those
sort
of
things
you
know
when
it
goes
up
nationally.
We
see
it
go
up
in
in
kentucky
as
well,
but
there's
not
a
inflation
specific
portion
for
just
kentucky.
I
understood.
D
C
What
I'm
going
to
look
at
30
years,
what
I'm
looking
at
is
krs
161,
401
b
for
30-year
projections
on
the
experience
study,
and
this
is
the
study,
but
I
don't
see
30-year
projection
30-year
projections.
Let's
see
actually
recommended
contribution
rates
for
employees
over
a
30-year
period.
That's
what
I'm
looking
for.
I
can't
find
it.
D
C
C
And
I
want
to
say
I
appreciate
it
because
last
interim
trs-
and
I
think
you
were
instrumental
in
this-
provided
me
with
30-year
projections,
and
I
appreciate
that
and
what
I'm
after
is
this.
This
experience
study
by
statute
requires
those
projections
to
come
out
and
I
don't
find
them.
I
was
hoping
to
find
them
because
I
wanted
to
compare
those
to
what
I
got
last
year
so
that
I
could
see
the
increased
rate
of
requirements
on
the
general
fund.
Going
from
this.
C
So
I
wonder
if
that
15-year
increase
is
going
to
hit
sooner
and
that's
what
I
need.
How
soon
could
you
provide
those
we'll.
C
That
would
be
great
and
then
I'll
follow
back
up
with
you
after
I
get
that
response
back
and
then,
if
I'm
looking
at
this
right,
if,
in
light
of
the
increases
from
the
experience
study
up
to
the
629,
has
the
board
entertained
or
considered
any
modifications
to
benefit
structures
which
aren't
a
part
of
the
inviolable
contract?
So,
for
instance,
the
third
most
impactful
item
you
had
in
one
of
your
slides,
which
would
have
been
the
sick
pay.
D
So
benefits
like
that.
We
consider
that
to
be
a
policy
decision
to
the
commonwealth,
there
have
certainly
been
bills
introduced
in
this
in
the
general
assembly
to,
for
example,
cap
sick
leave,
pay,
we
don't
take
our
borders,
not
take
a
position
on
that,
because
we
feel
that's
a
policy
decision
to
commonwealth.
We
provide
data
like
cost
savings,
if
you
were
to
cap
sickly,
for
example,
and
that's
what
we
do
and
we're
ready
to
do
that
for
for
any
future
legislation
as
well.
Yes,
sir.
C
So
it
hasn't
been
considered
just
studied
and
the
numbers
are
the
numbers.
D
We
provide
the
data
and
we
assist
the
general
assembly
providing
them
information,
so
they
can
assess
if
they
want
to
make
a
policy
decision
to
cap
sick
leave.
We
let
them
know
the
impact
of
that.
You
know
what
do
they
need
from
us
to
understand.
You
know
what
that
does
for
the
liabilities,
we're
glad
to
do
that,
but
as
far
as
changing
those
benefits,
we
can
stir
the
policies
into
commonwealth.
I
understand.
Thank
you,
mr
chairman.
One
thing
I
may
also
a
point
it's
on
these.
I
want
to
point
out
the
payroll
growth.
D
You
know
we
are
lowering
that
okay,
so
you
will
see
more
dollars
requested
in
the
budget
because
of
lowering
that
payroll
growth
because
we're
not
getting
those
dollars
from
the
contributions
out
of
teacher
salaries
or
from
the
employer.
You
know
so
on
that
side,
so
we
get
it
that
has
to
be
made
up
on
the
general
fund
side
instead,
so
we'll
be
getting
it
there,
but
that
will
be
increased
dollars
there
and
so
we'll
be
getting
more
dollars
in
early
and
that
will
reduce
the
dollars
in
later
years.
D
C
Chairman
and
if
I
may
follow
up
just
real
quickly
on
this,
yes,
please
proceed
and
this,
and
that
gets
to
why
I'm
wanting
to
make
sure
I'm
looking
at
these
assumptions
correct
and
understanding
why
they're
being
changed
and
whether
they're
being
changed
enough
based
on
the
right
data
sets,
because
we
come
back
in
another
five
years
with
another
experience
study
and
we
see
assumptions
that
some
of
us
think
should
have
been
changed
already,
and
then
they
get
changed
five
years
from
now
and
then
five
years
from
now,
they
get
changed
and
finally,
15
years
from
now
they're
down
to
the
rate
where
we
think
right
now
they
ought
to
be.
C
It
keeps
just
stringing
the
general
assembly
along
of
well
the
carrots
right
there
nope
it's
a
little
further
nope,
it's
a
little
further,
just
a
little
more
money.
I'd
rather
get
a
fair
assessment
right
now
of
what
our
situation
is
now.
I
also
understand
that
when
those
assumptions
move,
it
also
puts
a
great
burden
on
the
general
fund.
C
Likewise,
if
you
take
your
investment
return
down
and
discount
that
further,
it's
going
to
be
a
heavier
request
of
that
over
appropriation
by
the
general
fund
by
the
general
assembly
of
the
general
fund.
So
I
don't
want
that
to
happen,
but
I'd
rather
get
an
honest
assessment
of
where
we
are
as
best
we
can
get
with
honest
assessments
rather
than
expecting
another
change.
That's
going
to
get
us
closer
in
five
more
years.
That's
not
your
fault,
not
necessarily
the
board's
fault,
I'm
just
making
the
comment.
D
Representative
peter,
I
appreciate
that
completely.
I
want
to
assure
you
that
the
board
and
staff
have
that
same
goal.
We
want
the
best
assumptions
that
are
possible.
They're
not
going
to
be
perfect
because
we're
trying
to
predict
the
future.
Nobody
can
do
that,
but
we
want
the
best
assumptions
that
are
possible
and
that's
why
we
continually
review
these
things
annually.
We
do
that's
why
we
make
adjustments
to
budget
requests
annually
and
that's
why
we
do
these
experience
studies
every
five
years
and
we
don't
want
inflated
assumptions.
D
We
want
accurate
assumptions,
but
we
want
assumptions
that
you
know
we're
not
putting
too
much
burden
on
it's
it's
a
trade-off.
You
won't
put
too
much
burden
on
taxpayers
now
and
too
little
later,
as
you're
trying
to
get
where
you
need
to
be
that
in
that
24-year
period,
you're
100
funded,
so
sometimes
we
get
gains.
Sometimes
we
get
losses,
and
so
there's
that
24-year
trajectory
from
now
to
fully
funded
in
24
years.
It's
not
a
fixed
trajectory,
it's
something
we
make
modifications
to
the
left
to
the
right
all
along
the
way.
D
So
we
want
the
general
assembly
to
you
know:
give
them
information
that
long
term
we'll
have
these
liabilities
addressed
and
that
we
will
be
able
to
step
in
to
additional
funding.
But
yes,
I
absolutely
share
the
same
goal
that
you
do,
sir.
A
Thank
you,
bowl
representative,
petrie
kind
of
I
guess,
touched
on
something
I
was
curious
about.
The
three
things
are
three
three
items
outside
the
viable
contract:
sick
pay,
high
three
and
the
factor
of
three:
can
you
tell
us
off
the
top
of
your
head?
What
each
one
of
those
cost
as
a
percentage
of
payroll.
D
I'm
thinking
like
one
point,
eight
percent,
maybe
for
all
three
of
those
you
know
like
to
looking
at
follow
up,
but
that's
my
recollection,
and
that
was
maximum
savings
and
the
reason
I
say
maximum
savings
is
one
of
those
three
items
you
mentioned
is
the
high
three
and
what
that
means
is
for
our
members
who
retire
with
27
years
of
service,
but,
most
importantly,
more
importantly,
at
age,
55,
their
retirement
allowances
are
calculated
on
their
three
highest
salaries
instead
of
their
five
high
salaries.
D
So,
yes,
that
does
have
the
effect
of
increasing
their
retirement
allowance
that
they're
going
to
draw
one
day,
but
that
is
there's
an
offsetting
gain
from
that
in
that
teachers.
You
know
once
27
years
and
out
came
in
to
play.
They
can
retire
theoretically
as
early
as
49,
we
have
some,
not
many.
We
have
some
that
do
that,
so
that
means
we're
paying
out
benefits.
D
You
know
early
really
early
so
that
high
3
was
put
in
age
55
as
a
way
to
motivate
our
members
to
put
off
to
defer
retirement,
that's
good
for
the
retirement
system,
because
we're
you
know
deferring
paying
out
benefits
for
many
years.
In
fact,
when
our
members
come
in
to
trs
and
they've
talked
to
one
of
our
time
rate
counselors
and
they're
52,
our
tournament,
counselor
says:
why
don't
you
wait
till
55?
Look,
what
happens
you
know
and
we
have
a
chart.
We've
shared
that
with
this
board.
D
That
shows
the
age
at
which
people
are
retiring
and
it's
a
bar
chart,
orange
bars
and
the
tallest
bar
by
far
nothing
else
as
close
to
is
age
55.
So
it
shows
that
that
peg,
you
can
motivate
people
to
stay
in
longer
and
change
retirement
patterns
with
what
we
call
carrots.
You
know
incentivize
them.
So
if
that
were
to
go
away,
you
know.
Yes,
that
means
no
more
high
threes.
D
That
means
some
lower
term
allowances,
but
it
also
means
that
bar
is
going
to
evaporate
that
50
h55
and
it's
not
going
to
shift
to
the
right.
It
will
shift
to
the
left.
So
that's
what's
kind
of
hard.
You
know
to
determine
so
there's
you
know
the
cost
of
that,
and
so
that's
when
I
say
that
1.86
is
just
my
memory
that
could
be
wrong.
Percentage
of
payroll
savings,
the
actuator,
that's
a
maximum
savings.
B
Thank
you,
and
and
following
up
on
chairman
petrie's
comments
and
and
chairman
higdon's
comments,
I've
often
thought
that
the
krs
who
has
changed
to
they
don't
have
all
they
don't
wait.
Five
years
for
every
one
of
their
experience,
studies
for
all
their
assumption,
experience
studies
they're
on
some
kind
of
rolling
cycle.
B
I
think
that's
an
excellent
idea.
Five
years
doesn't
really
meet
up
with
our
I
mean
this
year.
I
guess
it
will,
because
next
year
we
have
a
budget,
but
in
five
years
that
won't
I'd
like
to
see
you
all
on
split
it
up
into
two
groups,
and
maybe
you
do
the
economic
assumptions
two
years
and
then
the
demographic
in
four
years,
and
then
you
just
keep
that
rolling.
So
the
impact
on
the
budget
is
a
little
more
modified.
B
So
we
don't
have
this
horrible
thing
facing
us
every
five
years.
Would
I
would
very
much
appreciate
your
trs
input
on
what's
reasonable
what
should
be
done
because
I'd
like
frankly,
I'd
like
to
standardize
it
across
all
the
retirement
systems?
Personally,
you
can
comment,
or
you
can
just
get
back
with
me
next
meeting.
A
B
To
present
a
question
has
been
touched
on
a
few.
A
B
There
are
adjustments
made
within
the
five-year
period.
It
sounds
like
it
sounds
like
that.
May
not
be
a
policy
yet,
but
a
policy
that
the
board
is
considering.
So
you
can
comment
on
that
and
is
that
for
all
assumptions,
all
the
assumption
possibilities
and
further
along
with
that,
has
that
been
done
in
practice.
Already
in
past
years,
assumption
changes
were
made
by
the
board
within
the
five-year
period.
Yes,.
D
So
yeah
good
question,
so
those
states
that
are
taking
assumption,
changes
and
and
phasing
them
some
way.
There's
they
do
that
in
different
ways.
D
So
it's
not
a
one
standard
way
of
doing
it,
but
it
they
are
addressing
assumption
changes
in
a
more
measured
way,
as
opposed
to
all
at
once,
because
they
know
there's
a
lot
of
moving
parts
always
continually,
so
they
are
finding
a
way
to
bring
those
changes
in
over
a
period
of
time
in
various
different
ways,
as
opposed
to
all
at
once,
and
that
is
not
something
that
trs
has
done
in
the
past.
D
Okay
and
again,
this
is
sort
of
a
newer
thing
that
we're
seeing
our
actuary
discuss
that
with
us,
because
you
have
several
states
now
that
are
starting
to
do
that.
It's
a
very
measured
way
of
stepping
into
new
return
assumptions
because
they
can
change.
You
know
the
next
five
years
they
can
change
again
and
that
allows
you
the
opportunity
to
evaluate
what
changes
may
be
in
the
next
one
in
response.
So
that
is
something
that
would
take
board
action.
D
B
Back
to
the
back
to
the
bennett
to
the
items
we
referred
to
as
outside
the
enviable
contract-
yes,
sir,
so
you
you
referred
to
those
decisions
as
policy
decisions
that
you
and
the
trs
board
would
rather
the
legislature
make
were
they
when
they
were
added,
as
benefits
like
when
the
call
was
added
when
the
high
three
was
at
added.
Were
those
policy
decisions
that
were
made
by
the
legislature
or
were
they
suggested
by
the
trs
board
at
that
time?
Do
you
remember.
D
D
I'm
afraid
I
don't
and
the
sick
leave
is
actually
even
in
a
statute.
That's
not
a
trs
statute.
It's
in
a
department
of
education
statute,
krs
161
155,
so
I
don't
know
how
that
came
about
that
could
have
been
by
education
groups
or
you
know,
department
or
or
school
districts.
I
don't
know,
I'm
sorry.
B
Okay,
and
then
you
referred
to
the
total
cost,
when
senator
higdon
asked
about
the
total
cost
of
those
items
outside
the
enviable
contract
as
being
two
pers
around
two
percent
now
is:
can
you
put
that
in
terms
of
our
annual
contribution
from
our
budget?
How
much
would
that
save
us
our
budget
annually?
If
those
items
were
not
there?
Okay,.
D
B
D
Numbers,
okay,
sure
and
and
again
with
the
caveat
that
those
were
maximum
savings.
So
our
percentage
point
is
it's
roughly
35
million
dollars,
so
60s
million
dollars,
you
know
again
maximum
savings.
So
I
think
if
the
high
three
were
really
considered,
you
know
fully
and
the
effect
that
it
has
in
keeping
our
members
longer
and
you're.
Looking
more
at
sick
leave,
you
know
you're,
looking
probably
more
at
45
million
50
million.
That's
the
big
one.
The
three
points
factor
for
years.
D
Just
for
those
years
work
beyond
30,
which
is
another
carrot
offered
to
keep
futures
working.
That's
not
much
of
a
factor,
the
big,
the
big
one.
There
really
is
sick
leave,
so
the
sick
leave
is-
and
I
can
get
you
more
recent
numbers-
the
cost
of
sick
leave.
But
you
know
we're
talking.
Probably
the
50
million
dollar
range
for
sick
leave.
B
And
then,
finally,
so
in
your
opinion
or
is,
is
it
your
opinion
that
the
69
million
dollar
cost,
or
whatever
is,
are
we
money
well
spent
for
carrots
moving
forward
or,
as
far
as
you
know,
we
always
hear
when
we
talk
about
making
changes
to
teachers
pension?
We
always
talk
about.
We,
you
know
we're
going
to
lose
teachers,
we're
we're
going
to
have
to
our
we're
going
to
have
a
big,
a
void
of
new
teachers
coming
in
losing
experience.
So
is
that
a
carrot
that
you
think
keeps
people
working
longer.
D
The
the
the
high
three
definitely
is
a
carrot
without
a
doubt
that
keeps
them
working
longer
and
and
that
chart
I
can
bring
that
again
to
the
next
meeting
of
the
board
and
it
really
just
visually
graphically
shows
how
successful
that
high
three
works
and
keeping
them
teaching
longer.
The
three
percent
factor
for
years
worked
just
for
those
years
work
past
30
to
try
to
keep
them
working.
You
know
that
probably
has
some
effect
and
not
as
much
not
nearly
as
much
as
the
high
three
and
keeping
them
in
longer
sick
leave.
D
I
don't
know
that
necessarily
keeps
them
in
working
longer,
and
that's
not
really.
You
know
something
we
see
necessarily
is
I
mean?
Maybe
it
does?
They
want
to
keep
on
coming
sickly,
but
I
think
the
bigger
issue.
There
is
really
a
non-retirement
issue,
and
that
is
what
we
hear
again
from
super
tense
administrators
that
they
value
sick
leave,
use
for
retirement
calculation
purpose
as
a
way
to
decrease
absenteeism
in
the
school
districts.
You
know
decrease
turnover.
D
Teachers
are
taking
their
sick
leave
instead
of
saving
it
for
retirement
and
then
they're
seeing
you
know,
disruption
in
the
class
classroom,
environment
and
they're
they're
paying
for
the
cost
of
the
sub
to
come
in
and
replace
them.
And
then
that's
not
that
that's.
Why
I'm
just
repeating
why
I
hear
from
them
about
what
how
they
value
it.
A
Any
further
questions
I
do
want
to
bring
up
one
point:
that
in
2018,
when
we
did
senate
bill
senate
bill
151,
the
the
general
assembly
took
a
bold
mood
and
and
bo
move
and
agreed
to
statutory
require
ourselves
to
make
that
arc
payment
every
year,
and
also
we
went
to
a
level
dollar
which
pretty
much
at
the
time,
committed
us
to
about
400
million
dollars
additional
at
the
time
on
top
of
the
500
million.
A
A
You
know
the
underfunding
and
and
these
escalating
every
year,
more
money
because
we'd
like
to
you
know
when
you
every
year,
we'll
have
a
little
more
money
in
our
budget.
But
it
seems
like
every
time
we
have
a
little
more
money
in
our
budget,
that
the
our
retirement
costs
increase
and
and
puts
a
strain
on
representative,
petrie
and
and
chairman
mcdaniel,
when
their
puts
them
in
a
bad
mood.
A
Trying
to
make
things
make
ends
meet
not
that
they're
putting
it
in
pensions.
It's
just
trying
to
make
ends
meet
and
all
the
requests
that
we
get
that
I've
I've
been
in
some
of
those
meetings
and
the
requests
for
for
funding
through
the
budget
is
is
tremendous.
So
seeing
no
further
questions
motion
to
adjourn.