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From YouTube: Public Pension Oversight Board (10-19-21) - Full Upload
Description
Due to Technical issues the first part of the meeting was not live streamed. LRC staff have loaded the complete meeting as it would have appeared during the live stream here.
A
B
A
We
have
a
quorum,
so
we're
duly
authorized
to
do
business
first
order.
Business
is
to
prove
the
minutes
from
our
september.
21St
2021
meeting
have
a
motion.
I
have
a
motion
by
representative.
Graham
second,
oh
move,
I
mean
second,
I
think
that's
senator
neal
second
set
all
in
favor
signify
for,
say,
ni
opposed
the
eyes
have
it
the
meeting
minutes
are
approved.
A
I
would
like
to
recognize
mike
jefferson
who
term
has
expired
and
is
no
longer
serving
on
this
board,
and
we
want
to
thank
him
for
his
years
of
service
and
he
certainly
brought
a
lot
to
the
table
and-
and
mike
I
don't
know
if
you're
listening
today,
but
if
you
are
thank
you
very
much
for
your
service.
We
certainly
appreciate
it.
Thank
you.
A
Our
first
order
of
business
today
is
we'll
talk
about
actuarial
audits.
At
the
last
meeting
we
discussed
actual
audit
of
the
retirement
system.
It
was
apparent
that
many
of
you
had
questions,
and
we
may
need
more
general
understanding
of
actuarial
audits
in
the
process.
Today's
staff
will
be
going
over
the
basics
of
an
actual
actuarial
audit.
We've
also,
based
upon
your
questions
and
comments,
decide
to
move
forward
with
a
request
for
information
rafi
as
a
first
step.
A
G
You
chairman,
make
sure
my
mic
is
where
you
all
can
hear
me.
Am
I
good
you're
good
all
right?
Thank
you.
So
I'm
going
to
preface
this
by
saying
that
we
are
doing
a
brief
review
here.
We've
we've
obviously
started
the
process
in
august
and
you
all
took
the
vote
to
ask
lrc
to
expend
funds
start
the
process
to
expend
funds
to
hire
the
actuary,
so
those
boxes
have
been
checked
and
that
that
can
proceed.
G
A
G
You
chairman
and
my
apologies,
my
name
is
jennifer
hans,
I'm
lr
staff,
lrc
staff.
I
work
with
the
ppob
as
a
legislative
analyst
and
basically
I'm
junior
brad.
So
that's
like
a
good
way
to
introduce
myself.
So
if
you
can't
get
a
hold
of
brad,
you're
always
welcome
to
get
a
hold
of
me.
So,
as
we
discussed,
this
is
just
sort
of
an
update.
G
Some
of
this
will
be
review
for
the
members
and
hopefully
we'll
be
able
to
answer
some
questions
at
the
outset
and
then
we'll
go
over
the
request
for
information
and
what
that
really
entails
and
how
that
can
be
an
opportunity
to
have
more
input
from
the
board.
So
at
the
outset
I
will
say
I
am
not
an
actuary.
G
G
G
It
is
mandatory
and
it
requires
that
every
five
years
the
ppob
evaluate
the
the
reliability
of
each
system's
actuarial
assumptions
and
methods.
Also
under
krs-7a
it
is.
It
is
required
that
the
cost
of
this
is
to
be
paid
by
the
retirement
systems
and
included
within
their
budget.
So
basically,
that's
just
a
cost.
Deferral,
lrc
pays
it
and
then
seeks
the
reimbursement
of
the
systems
as
a
part
of
the.
It
is
part
of
the
statute
that
we
do
that.
G
G
So,
as
you
all
are
aware,
an
actuarial
valuation
is
essentially
an
appraisal
of
the
funds
and
the
health
of
the
funds,
and
you
know
they
estimate
the
future
liabilities
and
assets
at
that
given
point
in
time
for
that
fiscal
year.
So
an
actuarial
audit
involves
engaging
an
outside
actuary
or
reviewing
actuary
to
evaluate
the
work
of
the
retirement
system's
consulting
ex
actuary.
G
G
Those
are
the
audits
that
are
certainly
conducted
each
year
by
the
systems
as
to
their
financial
statements,
to
reconcile
those-
and,
of
course
those
are
the
kinds
of
audits
that
are
typically
handled
by
the
otter
auditor
of
the
state
auditor
harman's
office
does
those
on
a
regular
basis
or
those
conducted
by
cpa.
That's
not
what
this
kind
of
audit
does.
G
Nor
is
it
a
forensic
audit.
So
it's
not
the
kind
of
audit
that
would
be
conducted
by
by
some
sort
of
investigative
audit
that
would
investigate,
for
example,
public
companies
that
are
accused
of
wrongdoing
or
would
probe
investments
to
some
degree
to
find
out
if
there's
been
any
mismanagement
or
mishandling
of
funds.
So
it's
not
a
forensic
audit,
nor
is
it
an
operational
or
management
audit.
G
You
may
have
recalled
that
in
the
past
the
systems
have
conducted
their
own
audits
of
how
they
how
they
have
managed
things,
how
they've
managed
their
their
their
assessment
of
of
their
own
administrative
fees
and
those
kinds
of
things.
That's
not
what
this
audit
would
do,
so
that's
sort
of
what
it
it
isn't.
G
So
what
an
actuarial
audit
does
is
it
reviews
the
valuation?
So
it's
going
to
take
a
look
at
the
actuarial
assumptions
which,
obviously,
as
part
of
the
experience
study,
we've
learned
a
lot
about.
So
those
are
the
economics
assumptions
like
inflation,
inflation,
investment,
your
payroll
growth,
your
non-economic
demographic
assumptions
like
mortality,
the
incentions
that
they
make
associated
with
the
health
insurance
funding.
G
It
also
will
look
at
the
methods
that
the
actuary
takes.
There
are
certain
methods
that
are
prescribed
by
law
in
some
cases
or
by
the
funding
policy.
In
some
cases,
there's
also
the
asset,
smoothing
that
we
hear,
often
with
regard
to
evaluations
and
how
they
are
smooth
over,
for
example,
a
five-year
period.
The
actuary
is
going
to
make
sure
that
that
has
been
done
and
applied
to
each
of
those
actuarial
evaluations
that
it's
reviewing
they're
going
to
review
the
actuarial
process,
how
they
followed
the
standards
of
practice
with
respect
to
the
actuarial
associations
review.
G
Have
they
met
all
the
conditions
of
the
reporting
agencies,
such
as
the
as
the
gatsby
requirements,
and
also
they'll,
also
review
their
final
report
and
their
board
presentation
have.
They
shown
their
findings
in
a
way
that
is
accessible,
and
that
makes
sense
from
a
from
a
basic
person's
point
of
view
in
a
way
that
is
easily
understandable.
G
The
final
area
is
where
the
kind
of
actuarial
audit
gets
a
little
bit
different,
so
it
is
all
of
the
actuarial
audits
that
are
performed
is
are
going
to
look
at.
What
is
the
total
liability
that
that
the
actuarial
audit,
the
actual
evaluation,
came
up
with
what
funding
level
did
they
finally
rest
on
and
what
kind
of
matching
can
they?
What
how
does
their
data
match
up?
In
some
cases
with
the
the
the
audit?
Excuse
me,
the
actuarial
valuation
that
was
conducted.
G
The
issue
of
calculations
matching
comes
down
to
what
level
of
audit
you've
sought.
So
all
of
the
actuarial
audits
that
are
conducted
are
going
to
look
at
all
four
of
these
areas
and
determine
whether
things
are
reasonable,
consistent
and
accurate,
whether
that
valuation
and
whether
the
actuary
that
conducted
that
meets
those
three
areas.
G
But
if
you
look
at
the
different
levels
of
actuarial
audit,
you
get
a
little
bit
more
a
sense
of
what
kind
of
scope
of
review
you're
seeking
now
all
of
the
all
of
the
three
levels
are
going
to
examine
the
consultant
actuaries
work,
so
they're
all
going
to
examine
the
reports.
The
valuation
reports,
the
experience
studies
in
many
case
many
cases,
the
kaffirs
other
data
and,
in
many
cases,
they're
going
to
open
a
dialogue
between
themselves
and
the
actuary,
the
staff
that
that
oversaw
the
actuary
etc.
G
They
all
are
going
to
examine
what
actuarial
methods
were
used,
what
procedures
were
conducted
and
what
assumptions
they
took.
This
is
where
things
get
different
in
a
level
one
actuarial
audit
you're
going
to
have
a
full
scope
level
of
audit.
So
in
this
situation,
they're
going
to
use
the
same
data
assumptions,
methods,
calculations
and
experience
used
by
a
consulting
actuary,
both
level
1
and
level.
G
2
will
use
that
data
on
a
basic
level,
they're
not
going
to
go
into
the
granular
data
they're
just
going
to
review
it
at
a
at
a
a
basic
level
when
you're
talking
about
level
one
level,
two,
that's
where
you're
going
into
the
analysis
of
the
data,
so
all
of
that
data
is
going
to
be
shared
at
a
full
scope
or
limited
scope.
Analysis,
the
difference
between
the
full
scope
and
the
limited
scope
is
at
a
limited
scope,
they're
going
to
use
a
sample
of
the
system's
member
data.
G
So
there's
member
data
for
every
single
one
in
the
actuarial
valuation,
the
that
all
that
data,
all
those
assumptions,
the
method
it
was
collected.
All
those
calculations
and
the
experience
will
be
taken
from
the
consulting
actuary
and
sent
to
the
reviewing
actuary
they're,
actually
going
to
compare
they're
going
to
compare
the
data
that
they
receive
directly
from
the
systems
with
the
data
that
they
receive
from
the
actuary
themselves.
G
They're
going
to
make
a
a
comparative
analysis
of
that
to
see
if
they
match
at
the
limited
scope
area,
they're
going
to
do
that
on
a
sample
basis.
So,
instead
of
looking
at
member
by
member
by
member
by
member
they're
going
to
look
at
a
snapshot
of
members,
so
it
could
be
a
randomized
collection.
It
could
be
specific
targeted
based
on
the
category
of
member
that
kind
of
thing,
but
it's
a
limited
scope.
G
G
So,
to
give
you
a
sense
of
where
actuarial
audits
sort
of
fit
in
the
scheme
of
reviewing
the
state
administered
retirement
systems,
it
is
already
a
tool.
The
state
administered,
the
retirement
systems
use
so
they're
generally
conducted
by
the
systems
every
10
years.
So
for
the
kentucky
retirement
systems,
the
last
actuarial
actuarial
audit
was
conducted
in
the
2019-2020
period.
G
It
was
conducted
conducted
by
a
firm
called
the
siegel
group,
which
was
reviewing
the
actuarial
valuations
performed
by
grs.
They
were
looking
at
the
actuarial
evaluation
ending
on
june
30th
2019
and
their
prior
experience
study.
It
was
a
limited
scope
valuation,
but
of
course
it
was
reviewing
all
three
of
the
plans
that
krs
provides,
and
it
was
just
to
kind
of
give
you
a
sense
of
costs,
and
this
is
based
on
the
publicly
available
contracts
and
what
that
contract
max
was
so
we're
not
getting
into
sort
of
the
detailed.
G
You
know
cost
analysis,
but
it
was
97.5
000.
So
you
know
pretty
that
that
sort
of
gives
you
sort
of
a
sense
of
what
that
what
a
limited
scope
would
be
for
three
systems
for
the
teacher's
retirement
system.
The
last
audit
was
in
2015,
it
was
also
conducted
by
the
siegel
group.
They
were
reviewing
kavanaugh
and
mcdonald's
actuarial
evaluations.
G
G
Do
we
want
to
proceed?
What
in
a
perfect
world?
Would
an
actuarial
audit
look
like
so
you
know:
we've.
The
ppob
has
gotten
licensed
from
the
lrc
to
hire
an
actuarial
firm,
so
lrc
would
contract
with
reviewing
actuary
to
seek,
for
example,
a
level
one
full
scope,
audit,
it's
of
all
three
multi-plan.
We
know
multi-tiered
state
administered
retirement
systems.
G
To
confirm
that
each
system's
assumptions
and
methods
are
reasonable,
consistent
and
accurate
in
a
perfect
world,
and
then
the
reviewing
actuary
would
submit
a
preliminary
point
report
to
the
lrc
at
the
ppob's
choice,
but
in
many
cases
that
rep
that
preliminary
report
could
be
circulated
to
the
retirement
system
staff
for
them
to
have
an
opportunity
to
say.
We
think
this
point
right
here.
You
might
have
missed
something
or
or
there,
but
in
just
an
opportunity
for
them
to
maybe
make
a
comment
on
that
and
then.
G
G
G
It
is
issued
it's
something:
that's
issued
prior
to
an
rfp
or
an
rfq
or
some
other
procurement
step,
but
it
explains
the
task
at
hand,
but
in
more
general
terms,
without
a
narrow,
specific
scope
of
work
it
succee.
It's
seeks
proposed
solutions
to
the
task
and
how
to
accomplishment
accomplish
it,
not
necessarily
in
specified
ways
but
or
you
know,
in
maybe
a
list
of
ways
as
well
as
open-ended
to
allow
the
responding
vendors
or
the
responding
firms
to
provide
other
suggestions.
If
there
are
any
it
is
informational
only.
G
G
It
does
not
financially
obligate
the
lrc
for
any
cost
associated
with
responses,
and
I
think
that's
important,
as
the
chairman
indicated
today.
It
allows
for
greater
public
discussion
in
this
venue
and
with
the
legislators
before
the
ppob
and
allows
us
today
to
have
a
more
additional
input
from
you,
so
the
other,
I
think,
important
issues.
G
Who
are
we
talking
about
how
many
firms
are
we
really
talking
about
in
this
situation,
and
it
offers
perhaps
answers
and
solutions
that
we
may
not
have
really
even
thought
about
before?
Certainly
a
staff
for
you
that
could
go
into
the
final
scope
of
work
that
could
influence
cost
and
certainly
timing.
G
So
in
your
folders
today,
we've
included
an
rfi
just
for
your
review
and
the
the
other
thing.
That's,
I
think
important
is
to
know
that
what
kind
of
responses
that
we
can
hope
to
get
back
to
an
rfi,
so
interested
firms
would
not
respond
with
a
bid
for
ex,
as
we
explained,
a
certain
scope
of
work,
but
they
can
provide
answers
to
the
contracting
entities
inquiries.
G
So
they
can
provide
solutions,
alternate
solutions,
so
we
can
ask
for,
as
was
expressed
at
our
august
meeting,
do
we
want
level
one
or
level
two?
What
does
that
look
like
in
terms
of
scope
in
terms
of
time
in
terms
of
estimated
costs
it
can?
They
can
offer
some
sort
of
discussion
as
to
matters
unique
to
the
contracting
entity.
So
in
this
case,
kentucky
has
three
large
systems
with
multi-plan
multi-tiered
plans
within
them,
and
that
might
be
something
unique
that
the
firms
should
have
would
have
to
address
it
can
talk.
G
G
It's
important
to
know
too
that
for
for
reviews,
this
size
you're
going
to
have
multiple
actuaries,
so
you
may
have
a
primary
actuary
who
is
going
to
review
your
review
and
be
in
charge
of
the
the
audit,
but
you'll
have
additional
secondary
actuaries
you're,
certainly
going
to
have
staff
attached
to
this
who'll
be
in
communication,
and
so
how
many
people
are
we
talking
about?
That's
going
to
be
required
to
accomplish
this.
G
G
Currently
it
has
an
introduction
just
to
let
them
know
let
interested
vendors
know
what
we're
looking
for.
It
has
background
information
on
our
statutory
obligation,
information
on
the
systems
where
they
can
find
additional
information
from
the
systems
it.
We
specifically
ask
as
requested
what
scope
of
actuarial
audit
they
would
recommend,
in
light
of
our
in
the
the
magnitude
of
the
task
at
hand,
so
a
level
one,
a
level
two
or
level
three
or
some
sort
of
other
proposal
that
would
meet
the
definition
of
the
statute.
G
Clearly,
the
statute
doesn't
say,
doesn't
get
into
the
granular
issues
of
level,
one
level
two
or
level
three,
so
we're
open.
You
know
that
opens
the
possibility
of
another
proposal.
We
talked.
We
asked
for
information
from
them
as
to
how
they
would
structure
an
actuarial
audit
of
the
systems
and
any
concerns
and
or
issues
that
they
would
have.
That
would
be
unique
to
kentucky.
G
I
know
that
several
members
had
concerns
about
seeking
a
truly
independent
actuary
to
conduct
the
audits
so
that
they
would
not
have
any
conflict
of
interest
having
served
perhaps
as
a
consulting
actuary
at
some
point
in
the
past.
So
we've
asked
a
question
about
what
kind
what
level
of
independence
would
be
required
and
if
there
is
some
sort
of
contact,
how
could
you
guarantee
a
conflict-free,
so
you
know:
would
there
be
different
staff?
How
would
that
work?
So
we
have
a
question
in
there
about
that.
G
What
kind
of
qualifications
again
would
be
necessary
for
this,
and
then
we
request
estimated
time
really.
You
know,
I
think
it's
fair
to
say
that
a
six-month
time
frame
so
that
it
can
be
accomplished.
You
know
after
session,
but
within
next
year,
is
something
that
we'd
be
interested
in.
So
we're
kind
of
wanting
to
know
is
that
you
know
is
that.
Are
we
reasonable
with
that
time
analysis
or
are
they
looking
for
something
more,
an
estimated
number
of
staff
that
would
be
required
and
then
again,
our
discussion
regarding
an
estimated
cost?
A
Jennifer
very
good
job
of
explaining
it.
This
was
all
clear
as
mud
this
time
last
month,
but
you've
kind
of
helped
us
to
better
understand
the
difference
between
level,
one
level,
two
level,
three,
an
rfp
and
an
rfi,
and
we
had
a
lot
of
discussions
after
last
month's
meeting
and
even
prior
to
last
month's
meeting
to
try
to
to
decide
what
was
the
best
approach,
and
I
think
thank
you,
you
and
brad
for
helping
us
work
through
this
and
to
better
understand.
A
B
G
My
understanding
is
through
the
director's
office.
We
certainly
try
to
track
as
closely
as
possible
the
level
of
transparency
that
you
would
see
at
other
agencies.
Yes,
sir,
and
we-
and
I
know
my
understanding
is
that
it
will
go
out
as
part
of
the
you
know-
procurement,
websites
and,
and
that
sort
of
thing-
and
that's
true-
of
an
rfi
as
it
is
of
an
rfp.
B
D
Thank
you,
mr
chair,
and
thank
thank
you
jennifer
for
this
audit
information
and
very
important,
and
while
it
gets
into
the
weeds,
you
did
a
great
job
of
getting
into
the
weeds
and
explaining
some
things,
because
I
had.
I
started
to
get
a
lot
of
questions
related
to
conflict
of
interest
and
scribble
them
down,
and
you
answered
most
of
them
except
this.
This
one.
Do
you
know
if
there
is
an
industry
standard,
or
can
we
ask
the
actuaries?
G
We
have
asked
for
them
to
provide
information
on
whether
they
are
a
member
of
the
american
academy
of
actuaries.
I
am
not
sure
if
the
academy
has
a
specific
conflict
of
interest
provision.
I
can
look
that
up
and
see
if
they
do,
but
you
know,
certainly,
we
would
be
looking
to
make
sure
that
they
don't
have
a
conflict
and
if
they,
if
there
is
the
potential
for
conflict,
then
sort
of
like
an
attorney's
firm
and
I'm
speaking
from
you
know
an
attorney's
perspective.
G
So,
like
an
attorney's
firm,
what
could
you
take
what
you
know
the
wall
yeah
the
wall?
What
what
I'm
thinking
about
the
wall?
So
what
what
steps
could
you
take
to
to
wall
off?
Perhaps
the
the
principals
who
had
won
had
contact,
perhaps
with
a
retirement
system
from
the
ones
who
would
be?
You
know
having
it
now
again?
That's
not
necessarily
how
we
would
proceed,
but
it
certainly
gives
them
an
opportunity
to
talk
about
independence
and
conflict.
If
that's
something
that
they
choose
to
do.
D
And
this
had
to
do
with
when
you
went
through
the
you
know
what
what
is
an
actuarial
audit
in
this
case,
and
one
thing
that
I
had
thought
we
would
at
some
point
consider
is
the
actual
actions
of
the
legislature
and
the
boards,
whether
they
were
actually
that's,
not
the
right
word.
If
they
were
good
decisions
to
proceed
in
that
direction,
for
instance,
we
have
a,
we
changed
the
life
expectancy
recently
and
we
based
that
on
actual
experience
in
kentucky,
as
opposed
to
a
previous
standard
that
we
had
before.
D
So
that
seems
like
a
pretty
wise
thing
to
do.
I
was
wondering
if
the
audit
report
that
we
get
from
the
this
actuary,
who
will
do
this?
Will
there
be
any
opinions?
Do
we
want
to
ask
for
any
kind
of
information
related
to
almost
outside
of
the
actual
hard
numbers
of
you
know
doing
a
complete
review
of
all
of
the
line
individual
members
accounts.
G
I
understand
what
you're
asking
I
think,
so,
if
even
outside
of
a
full
scope,
replication
audit,
an
auditor
is
still
going
to
get
to
the
heart
of
the
advice
that
the
actuary
is
giving
to
the
systems.
So
that
would
include,
for
example,
what
what
they've,
what
advice
they've
given
given
as
to
demographics
and
how
they've
changed
or
what
mortality
tables
they're
looking
at
so
there's
a
better
way
to
approach
something
like
that.
They
can
opine
on
that.
G
If
they're
following,
for
example,
an
amortization
system,
that's
based
on
statute
that
was
recently
changed,
or
perhaps
it
hasn't
been
changed
in
a
while
and
there's
a
better
way
of
doing
that
or
there's
a
trend
towards
something
that
that
they
notice
that
hasn't
been
addressed
by
the
original
actuary.
They
can
opine
on
that.
D
G
You
know
that
that
might
be
something
that
we
could
put
in
a
scope
of
work.
It
might
be
something
that
they
were
already
done.
I
do
think
that
you
would
find
interesting.
Perhaps
a
comment
as
to
the.
I
believe
that
the
cers
phase
in
was
something
that
was
discussed
in
the
last
audit,
so
just
just
as
an
aside.
F
F
F
If
somebody
else
scooped
brad
up
and
it's
nice
to
know,
we
have
a
brad
junior,
but
with
that
being
said,
I
just
want
to
say
that
I'm
always
amazed
and
impressed
at
the
knowledge,
the
capability
and
the
just
the
the
the
abilities
that
you
you
and
your
lrc
team
brand.
You
and
the
lrc
folks
bring
to
us
legislators.
We
legislators
we
could
not
do
what
we
do
if
we
didn't
have
you
and
I'm
just
really
appreciative
of
your
knowledge
and
capability.
F
This
presentation
was
a
perfect
example
of
the
fact
that
you've
done
your
homework
and
you
know
how
to
help
us
keep
these
systems
afloat.
So
the
four
and
a
half
million
kentuckians
that
depend
on
you.
Thank
you
for
what
you
do.
You
don't
hear
it
enough.
So
thank
you.
That's
all
I
wanted
to
say,
mr
chairman,
thank.
A
A
A
You
know
you
just
really
help
us
understand
a
very
complicated
issue,
and-
and
this
has
been
a
complicated
issue
with
no
further
questions,
we
will
proceed
with
the
rfi
and
we
will
have
a
lot
of
opportunities
going
forward
to
ask
questions
and
that's
a
good
thing
about
the
rfi,
we're
we're
not
setting
anything
in
in
in
stone
today
that
and
we'll
have
a
lot
of
opportunities
as
we
go
through
this
process,
so
jennifer.
Thank
you
very
much
and
a
very,
very
thorough
presentation,
and
we
certainly
appreciate
it.
Thank
you.
A
A
E
C
C
E
Okay,
I
guess
the
the
question
is:
why
am
I
here
today?
I
have
a
feeling
that
there
are
meetings
like
this
going
on
all
over
the
country
and
the
primary
reason
initially
was,
which
started
in
july
and
august
was
the
investment
return
that
retirement
systems
across
the
country
earned
collectively
we
were
up
25.2
percent
for
the
year
into
june
30th
of
2021..
E
We
were
actually
at
the
lower
end
below
the
average.
That's
due
to
the
lower
risk
posture,
we
have
the
more
conservative
asset
allocation,
but
anywhere
from
22
to
30
is
kind
of
the
going
rate.
So
I
think
that's
one
issue
that
got
this
ball
rolling
here
in
kentucky.
I
think,
give
credit
to
jim
carroll
he's
raised
the
issue,
I
think
he's
an
excellent
advocate.
We
find
to
be
an
excellent
ad
advocate
for
retirees
and
a
very
professional
approach.
E
What's
happened
since
july
and
we
got
these
numbers
we're
now
facing
inflation.
We
have.
The
social
security
has
just
announced
their
cola
for
2022,
it's
5.9
percent,
that's
a
multiple
of
what
it's
been
in
recent
years
and
and
secondly,
most
the
average
retirement
system
nationwide
is
public
system
is
over
82
percent
funded.
So
most
funds
are
in
a
much
better
position
than
we
are
to
be
able
to
take
on
a
to
take
on
a
cola.
E
E
The
premium
they
earned
over
the
assumption
in
both
cases
was
17.4
19.3,
the
shortfall
we
had
in
2009
versus
the
assumptions.
The
current
assumption,
not
the
then
assumptions
I
don't
have
that
number
at
hand
22.5
and
23.8.
So
we
lost
more
money
relative
to
the
assumptions
in
2009
than
we
gained
in
2021..
E
That's
the
two
tails
and
I
we
want
to
keep
that
in
mind
that
there's,
I
think
as
grs
would
say.
If
you
give
a
call
away,
you
can't
get
it
back
and
that's
what
we
that's
the
judgment
that
has
to
take
place
and-
and,
as
you
know,
we
don't
we're
not
taking
a
policy
stand
one
way
or
another.
I'm
here
to
present
information
answer
questions,
as
are
the
grs
people,
but
I
wanted
to
hit
the
history
of
colas
gotta
schedule
going
going
back.
E
E
E
E
E
E
E
E
E
For
the
retirees,
but
if
you
took
nonetheless,
you
know
two
and
a
half
dozen,
it
seems
like
pretty
moderate
inflation,
but
if
you
took
a
a
retiree
who
went
out
at
25,
000
and
and
lost
2
a
year
in
inflation
purchasing
power
at
the
end
at
the
end
of
20
years,
they
would
have
point
six
seven
purchasing
power
now,
in
other
words,
they'd
lose
just
two
percent
inflation.
For
twenty
years,
you're
gonna
lose
a
thirty
purchasing
power.
E
E
The
problem
was
that
we
didn't
prepay
for
the
colas
and
by
statute
so
that
if
in
a
given
year,
we
gave
a
four
and
a
half
percent
cola,
that's
going
to
be
in
place
for
as
long
as
that
person
lives,
there's
a
a
pretty
significant
cost
associated
with
that
and
and
from
a
fiscal
standpoint.
The
best
thing
would
be
was
to
pay
that
upfront
and
get
it
covered,
and
we
didn't
do
that
and
that
added
to
the
unfunded
liability,
pfm
would
say
it
added
about
2.4
billion
dollars.
E
E
Here's
back
to
the:
why
are
we
here
today?
One
of
the
contributing
reasons
is
the
inflation
rate
in
2021
and
where
you
know,
there's
a
you
talk
to
two
economists
and
one
says
it's
here
to
stay
and
one
says
it's
transitional
and
we
just
don't
know,
but
there
seem
to
be
indications,
it's
going
to
continue
at
a
higher
level,
so
for
some
period
of
time.
E
Nationally,
what
are
people
doing
by
the
way
I
didn't
say
earlier,
but
the
automatic
versus
the
ad
hoc
it's
about
two
and
a
half
to
one
automatic
versus
ad
hoc,
so
it's
much
more
prevalent
to
be
automatic
than
it
is
ad
hoc.
I
suspect
and
grs
can
weigh
in
on
this.
I
suspect
that
ratio
is
going
to
change.
I
suspect
that
more
states
are
going
to
want
flexibility.
E
They
may
want
to
do
one-time
things
like
this,
like
jim
carroll
is
proposing,
so
I
I
think
we
may
see
more
ad
hocs,
but
here's
the
general
trend
moving
away
from
cpi
driven
moving
toward
caps.
In
other
words,
something
if
even
if
it
is
indexed
off
something
it's
going
to
have
a
cap,
no
more
than
three
percent,
no
more
than
five
percent.
E
Those
seem
to
be
common
caps
and
be
a
fixed
rate,
so
fixed
rate
automatically
caps
it,
but
we're
gonna
use
three
percent
or
two
percent,
or
one
and
a
half
percent
in
this
case,
and
now
more
are
being
tied
to
financial
conditions,
funded
status
and
investment
performance,
and
at
our
last
meeting
representative
plessy,
you
raised
a
question
about
this
whole
issue
of
well.
A
little
bit
of
the
concept.
E
We're
talking
about
is
getting
a
dividend
and,
and
we
and
we
talked
about
well,
you
can,
you
can
pay
a
cola
out,
but
you
can't
recapture
it
once
it's
out
the
door.
Well,
there
are
ways
that
that
can
be
done
and
danny
started
talking
about
wisconsin
as
an
example
and
setting
up
a
reserve
fund.
I
don't
danny
you
want
to
comment
on
that.
C
Yeah
wisconsin
provides
a
dividend,
they're
very
clear
that
it's
it's
not
a
it's,
not
a
guarantee,
you
you
have
your
basic
retirement
benefit
and
then
they
they
look
at
actual
investment
performance.
They
compared
to
a
benchmark
if
the
investment
performance
exceeds
that
amount,
then
that
surplus
of
those
extra
assets
are
then
used
to
provide
a
an
increased
benefit
or
dividend
to
retirees
and
then,
in
years,
where
the
actual
investment
performance
underperforms
compared
to
the
benchmark,
they
actually
claw
back
or
pull
back
that
dividend,
but
never
below
your
original
retirement
benefit.
C
The
key
there
is
there's
inherent,
you
know
it's
it's
just
with
everything.
You
know
any
type
of
benefit,
there's
no
such
thing
as
a
free
lunch.
So
in
that
regard
it's
it's
there's
an
assumption,
there's
an
inherent
assumption
or
expectation
that
a
dividend
will
be
provided.
So
you
know
there
is
a
cost
to
it.
It's
not
a
free,
it's
not
a
free
benefit.
You
know,
even
when
you
think
of
in
terms
of
of
excess
returns,
but
there's
an
inherent
building
or
cost
associated
with
it.
But
what
does
make
wisconsin
unique?
C
C
You
know
by
design,
because
of
that
the
other
thing
you
think
of
the
it
in
terms
of
the
contribution,
the
employer
contributions
are
more
steady,
because
now
you
have
this
other
financial
lever
that
you
you've
got
pulled
on
your,
and
that
is
the
retirees
now
become
bears
some
of
the
investment
risks
yeah
they
benefit
when
things
do
well,
but
they
also
there's
a
cost
to
them
an
inherent
risk
to
them.
During
years
of
underperformance,
like
2008-2009.
E
Okay,
so
we
asked
grs
to
to
provide
a
financial
considerations
here,
most
notably
in
the
end.
What's
it
going
to
cost
and
we've
got
a
number
of
different
scenarios
that
I'm
going
to
look
at,
but
let's
start
with
with
just
the
status
of
the
plans-
and
this
is
june
30
of
2020-
not
21.,
but
it
is
the
the
bottom
line
is
the.
E
E
A
E
E
I'm
looking
at
my
notes,
57
well
51
8.
Had
it
been
market
value
to
be
57.5,
so
it's
it's
going
to
graduate
to
get
a
bigger
bang
over
the
next
five
years
than
than
k
is,
but
but
I'll
remind
you,
we've
had
this
will
be
the
fourth
year
in
a
row.
We've
had
increasing
amounts
of
funded
status.
That
starts
slow,
it's
the
principle
to
the
mortgage.
E
E
E
The
another
option
that
the
grs
suggested
was
it
was
simpler
and
they
they
have
witnessed
it
having
perhaps
what
they
think
is
more
impact,
and
that
is
do
one
time
give
them
a
13th
check.
For
example,
june
30th
of
2022
give
them
an
extra
check
that
costs
about
8.2
percent.
Three
percent,
I
mean
that's
roughly
one,
you
know
1
12
of
what
it
would
be.
E
That's
188
million
one
advantage,
two
advantages,
one
that
grs
points
out
is:
they
think
from
their
experiences,
had
more
impact,
immediate
impact
and
bigger
impact,
and
what
we
would
point
out
is,
I
jokingly
keep
saying
I
wouldn't
want
to
be
in
our
call
center.
Five
years,
six
years
from
now,
when
people
find
out
their
benefits,
went
down
they're
going
to
call
and
they're
going
to
think
we
made
a
mistake
and
they're
going
to
forget.
E
The
next
one
now
we're
getting
into
why
these
things
are
so
expensive
and
they're
probably
going
to
be
cost
prohibitive,
not
our
decision,
but
it
would
appear
to
be
take
five
one
and
a
half
annual
increases
from
the
current
year
and
cap
it
after
five
years,
so
you
keep
bumping
it
a
billion
five
and
then,
lastly,
is
a
you
know:
a
permanent
1.5.
Every
year,
6.0
billion.
B
Thank
you,
mr
chairman,
going
back
to
the
one
that
mentioned
the
funding
trends.
I
was
thinking
somewhere
around
here,
but
maybe
I
missed
it
or
overlooked
it.
I
was
thinking,
there's
something
about
capping
it.
It
aged
some
of
these
dealt
specifically
with
like.
If
you
hit
someone
that
retired
very
early
and
you
were
paying
a
cola,
the
coal
would
actually
not
be
given
to
the
younger
ones,
just
ones
that
had
been
in
this,
not
necessarily
in
the
system
but
based
on
an
age
criteria.
B
Thank
you,
mr
chairman.
Senator
mills.
Thank
you,
mr
chairman.
Just
clarification,
dave
back
on
page
four,
when
you
were
talking
about
the
history
on
colas,
you
mentioned
that,
did
I
hear
you
right
to
say
that
none
of
these
were
none
of
these
were
prepaid,
but
were
some
of
these
paid
for
that
are
listed
or
none
of
them
were
paid
for.
E
E
B
E
Made
a
calculation
that
it
was
15
of
the
reason
for
the
unfunded
liability,
which
works
out
about
2.4
billion
yeah
and
the
I
don't
know
how
to
unpeel
the
rest
of
it.
But
but
the
negative
amortization,
which
is
negative
amortization,
means
that
you
don't
even
pay
the
interest.
If
you're
thinking
about
a
mortgage,
I
got
a
mortgage
payment,
I'm
not
even
paying
the
interest,
so
the
principal
gets
bigger
and
bigger.
That's
a
big
number
and
this
would
have
contributed
to
it.
But
I
don't
know
what
to
what
extent.
F
Thank
you,
chairman,
just
wanted
to
make
a
comment
about
this.
Mr
eager
dave.
You've
done
a
good
job
as
always
presenting
this
data
and
helping
us
to
research.
What's
happened
in
the
past,
but
we're
kind
of
stuck,
as
I
see
it,
in
my
opinion,
in
a
rock
and
a
hard
place,
if,
if
financially
for
the
system,
it's
best
not
to
give
a
cola
for
the
next
26
years.
F
F
F
F
F
E
Well,
I'm
going
to
be
talking
about
some
things,
I'll,
let
grs
weigh
into
and
and
again
I
I
can
talk
about
some
policy
issues
doesn't
mean
we're
recommending
it
it's
just
there
is.
We
did
have
the
discussion
at
one
time
about
a
glide
path,
in
other
words,
contribute
the
cost
of
the
for
the
systems.
May
one
year
be
eighty
percent
the
next
year
might
be
six
when
we
hit
that
cliff
and
is
there
a
way
to
gradually
get
there
and
extend
that
period
of
time
we
call
it
a
glide
path.
E
I
don't
know
it's
a
proper
term
or
not,
but
maybe
in
beginning
in
the
year
11
you
start
reducing
it
the
cost,
but
you
extend
it
beyond
the
26
years.
If
you
follow
the
concept
it
goes,
it
would
go
down
every
year
by
some
amount
and
that
would
be
money
available.
Currently
I
don't
know
there
are
people
float
pension
obligation,
bonds
to
pay
for
colas?
I
suspect
somebody
has
and
and
push
the
maturity
that
bound
bond
out
further
so
to
the
point
where
they
feel
they
can
when
they
can
afford
it.
E
C
It
is
a
tough
spot.
You
know
they,
I
you
know
not
make
it
sound
any
better,
but
it's
just
I'm
stating
a
fact
here
is
the
retirees
in
krs
do
have
some
inflation
protection
with
social
security,
because
the
vast
majority
of
earned
benefits
and
social
security,
and
that's
not
the
case
with
the
teachers,
it's
my
understanding
most
the
teachers
and
the
trs
are
are
not
covered
by
social
security.
C
So
that's
that
is
one
difference
and
somebody
it's
they
don't
have
full
inflation
protection,
but
they
have
partial
which,
which
helps
dampen
some
of
the
lost
wage.
You
know
the
purchasing
power
of
their
benefit,
but
other
than
that
yeah
colas
are
very
expensive
and
the
cost
is
keep
was
going
to
keep
going
up.
As
you
get
more
and
more
retirees
to
provide
the
same
level
of
benefit,
I
mean
you
can
see
that
it's,
it's
it's
an
expensive
benefit.
C
E
I
think
there's
another
factor.
I
have
no
idea
what
the
numbers
are,
but
a
number
of
our
retirees
work.
I
mean
they
retire
and
they
take
another
job
and
go
somewhere
so
they're
they
are,
they
have
a
supplemental
income
and
that
income
presumably
is
going
up
by
some
amount.
Hopefully,
but
but
I
don't
know
what
those
numbers
are.
F
It's
one
for
a
working
age
person
not
to
get
a
call
up,
but
it's
another
thing
for
a
person
who's
not
of
working
age
or
a
working
ability
to
to
get
a
call-up
and
and-
and
maybe
this
is
a
a
question
to
to
our
lrc
staff-
either
jennifer
or
brad.
But
wouldn't
we
be
allowed
to
do
a
cola
just
for
those
who
are
disabled
and
or
above
a
working
age?
Is
that
something
we
would
be
allowed
to
do?
Or
is
it
not
a
bro?
It
has
to
be
done
for
what
has
been
done
for
all.
F
To
me,
that
makes
it
it
makes
it
more
stomachable
for
for
a
lot
of
us,
because
what
we
don't
want
are
people
who
are
on
a
fixed
income
and
have
no
ability
to
to
raise
their
income
they're,
the
ones
who
are
counting
counting
on
those
goals
to
keep
up
with
inflation
that
so
far
we
haven't
done
so
I
I
I'm
most
concerned
about
those
retirees
or,
let's
just
say,
75
years
old
and
and
not
able
to
go
to
work
any
longer.
That's
the
ones
that
I'm
really
concerned
about.
F
So
if
we
could
put
some
focus
on
that,
I
don't
want
to.
I
don't
know
if
that's
something
that
mr
white
could
could
put
to
us,
so
it
would
be
a
comparison
from
171
million
to
next
million.
If
we
put
an
age
of,
say
67,
which
I
believe
is
it
is
the
social
security
age.
Maybe
maybe
we
can
do
something
like
that
yeah?
Is
it
something
he
could
send
us
gary.
F
E
E
F
F
I
apologize.
Let
me
try
that
again.
If
you
were
to
do
if
we
were
to
do
a
1.5
cola
across
the
board,
that
would
essentially
be
a
big
boost
to
the
percent
payroll
assumptions
that
that
the
system
makes
so
does.
The
171
million
estimate
include
the
savings
that
we
would
see
by
having
an
increased
payroll
amount.
C
F
E
Yeah
and
if
you
have
some
any
general
ideas
about
scenarios,
but
in
the
meantime
I
think
you
know
we're
prepared
to
look
at
calculating
costs
are
some
various
scenarios
you
can
interpolate
between
numbers
and
better.
Give
you
an
idea
of
some
alternatives
with
the
I
I
think,
with
the
with
the
express
goal
of
trying
to
get
more
money
to
people
who
are
more
deserving
and
more
in
need.
B
Thank
you,
mr
chairman.
This
is
just
a
point
of
clarification.
Going
back
when
you
were
talking
about
the
glide
path.
Potentially
I
know
we
had
talked
about,
maybe
the
glide
path.
I
know
we
had
also
talked
about
it.
One
time,
stackable
liabilities,
you
know
a
continuous
30-year
m
each
year.
If
there's
a
if
there's
a
gain,
then
you
am
that
out
30
years,
if
there's
a
loss,
you
aim
that
out
30
years.
Is
that
the
same
or
a
separate
concept.
E
E
So
you,
whatever
you,
take
off
the
top
here,
you're
going
to
add
at
the
end,
but
it
it
gets
rid
of
that
issue
of
you
know.
Contributions
went
from
two
and
a
half
billion
to
200
million,
and
some
people
would
love
that.
But
it's
it's
it's
kind
of
a
bit
of
a
financial
conundrum.
If
you
will
and
and
so
you
could
kill
two
birds
of
the
one
stone
avoid
that
big,
cliff
and
start
reducing
payments.
Much
earlier
than
26
years,
thank
you,
mr.
C
Mr
harman
you're
you're
exactly
right
on
on
how
that's
how
that's
achieved
or
how
it
looks,
instead
of
taking
that
one
large
amortization
base,
what
it
does
is:
you're
breaking
it
up
into
15
or
20
different
tranches
or
layer
damorization,
and
each
one
is
amortized
over
a
shorter,
shorter
period
or
a
longer
period.
You
know
over
different
periods,
so
as
those
layers
those
individual
layers
get
fully
amortized,
then
that's
how
you
achieve
the
objective
of
your
contribution
requirement
going
down.
A
We
feel
an
obligation
to
the
retirees
and
we
also
have
an
obligation
to
a
retirement
fund.
That's
only
14
funded,
so
you
know
you
kind
of
get
pulled
in
two
directions,
but
I
guess
I
put
the
actuary
on
the
spot,
danny
and
and
what
you
have
a
you.
Have
a
fund
that
do
you
use
the
funds
to
pay
down
the
unfunded
liability
or
use
the
funds
to
pay
a
cola?
You
have
fiduciary
duty
also,
so
your
your
your
your
opinion
so.
C
In
our
opinion,
what
we've
told
kppa
is
it's:
it's
a
it's
a
policy
matter
regarding
on
the
cola
and
whether
or
not
to
give
one
or
what
that
looks
like
our
concern
and
our
opinion
will
be
on
to
make
sure
it's
appropriately
funded
and
when
I
say
appropriately
funded
if
you're,
if
you're
going
to
do
one.
If
you
come
to
the
conclusion
you're
going
to
do
a
one-time
payment,
you
need
to
pay
for
it
immediately,
don't
don't
give
a
benefit,
increase
and
then
decide
to
pay
for
it
over
the
next
20
years.
C
There's
a
cash
flow
mismatch.
That's
the
part
that
would
be
concerning
to
us,
but
to
align,
to
align
the
the
the
benefit
provided.
It
needs
to
be
funded
for
in
advance.
That's
the
that's
the
risk.
Any
time
when
you
have
do
ad
hoc
colas
is
how
are
we
gonna?
How
do
we
appropriately
pay
for
it
because
they're
not
being
pre-funded
in
and
so
that's
where
we
really
liken
the
statute
on
that
second
bullet.
If
the
general
assembly
it
takes
action
now
that
it's
it's
fully
funded.
E
Yeah,
I
would
say
also
of
course,
yeah
I'm
a
fiduciary
for
the
plan.
I,
if,
if
we
get
the
full
arc
and
the
general
assembly
decides
they
want
to
spend
another
dollar
on
colas,
I
think
that's,
that's
your
policy,
that's,
okay!
What
I
don't
want
to
do
is
have
you
fund
the
cola
taking
a
dollar
out
of
the
ark?
That's
what
I
don't
want
to
take.
A
Well,
very
good
discussion,
mr
eager,
you
have
a
homework
assignment.
Mr
mr
totten,
mr
carroll,
we
will
continue
this
discussion.
I
think
it's
very
productive
still
don't
have
any
answers,
but
like
say,
we
continue
to
look
into
this
situation
so
we
have
to.
We
have
to
figure
out,
we
have
to
remember,
we
have
a
fund,
that's
14
funded
and
that's
that's
and,
on
the
other
hand,
the
concern
for
our
retirees.
So
it's
a
delicate
balance
there.