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PERA 2002 Board Meeting Excerpts

 

November 15, 2002 (Official Minutes) pdf
October 18, 2002 (Official Minutes) pdf
Meeting Excerpts Discontinued
September 20, 2002
August 16, 2002
July 17-19, 2002
May 24, 2002
April 19, 2002
March 15, 2002
February 15, 2002
January 18, 2002

Board of Trustees Unofficial Meeting Summary:
September 20, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their October meeting. Katie Kaufmanis, Communications Director, prepared this summary. 

  1. The Board met on September 20, 2002, with 13 Trustees present. Trustees Campbell and Kasson were not present. (There is one Board vacancy.)

  2. There were no additions to the agenda. 

  3. The August 16, 2002 Board Meeting minutes were approved without change.

  4. There was no public comment.

  5. Others in attendance at the meeting included Colorado PERA staff members Meredith Williams, Lana Calhoun, Norm Benedict, Steve Brown, David Maurek, Rob Gray, John Spielman, Greg Smith, Don Schaefer, Paula Gurley, Debby Kaller, and Jennifer Paquette. Other attendees were Bob Kirscht, Roberta Kirscht, and Beth Minahan, PERA consultants; Carole Wright, former Trustee; Paul McElwain, retiree; Eric Myers, JBC staff; Gary Mechura and Bonnie Cahoon, Pinnacol Assurance; Curtiss Eckhardt, PERA Ambassador; Buzz Frum, New England Financial; Connie Anderson, CRSEA; Dennis Wolfard, retiree; Pat Peters, PERA Ambassador; Dona Johnson, retiree; Suzanne Kubec, State of Colorado; Emmet Krusek, PERA Ambassador; and Suzanne Zimmerman, CEA.

  6. The Vice Chair gave the Executive Committee Report and noted that the Human Resources Strategic Initiative would be postponed until the October meeting.

  7. Meredith Williams, PERA Executive Director, commented on the day’s meeting, reviewed recent activities and responded to Trustee’s questions.

  8. Norm Benedict, Deputy Executive Director of investments, briefed the Board on the market and responded to Trustee’s questions.

  9. Rob Gray, Director of Government Relations, outlined potential items for legislation in 2003. The Board will approve a final list at their October meeting. He noted that the Secretary of State had changed the deadline for changes to Rules and the Board would therefore need to conduct the Rules hearing in November instead of October.

  10. Greg Smith, PERA General Counsel, briefed the Board on pending litigation and personnel issues in a closed executive session. The Legal Department was directed by the Board to respond to any advertising that appears to be PERA-sponsored, but is not.

  11. The Board heard two Administrative Reviews. The Board voted to uphold the Administrative Review Panel decision for Carol Barella, and voted to reverse the Administrative Review Panel decision for Joseph Adamo.

  12. Allen Brodie and Ravi Gauthman of Northern Trust presented the annual performance report. No Board action was necessary.

  13. David Maurek, Manager of Strategy and Innovation, reviewed the process for the yearly Board Self-Evaluation. The evaluation process is part of the Strategic Plan and will be reviewed at a later Board meeting.

  14. Jennifer Paquette, PERA Director of Asset/Liability Initiatives, presented the Board with three different efficient frontier asset allocation models prepared at the Board’s direction. The Board voted to establish a new asset allocation model to reflect an increased portion of the portfolio being invested in bonds to meet the fund’s future liabilities. The Board directed staff to develop implementation scenarios for the new investment mix and to work with the Board’s Investment Committee for approval of the time line in November of this year.

    Asset Type Sept. 2002 Policy Current Allocation Previous Policy
    Domestic Equity 45% 45% 55%
    International Equity 14% 14% 17%
    Alternatives 8% 12% 8%
    Timber 1% 1% 2%
    Real Estate 7% 11% 8%
    Bonds
    --Domestic
    --International    		 25% 12%
    --9% domestic
    --3% international    		 10%
    --8% domestic
    --2% international
    Cash 0% 5% 0%

     

  15. Dave Slishinsky of Buck Consultants assisted Rob Gray in presenting the DC Plan Design Initiative item. All Board members were polled as to their opinion about the plan. The Board decided NOT to pursue legislation to add a DC choice to PERA’s benefit structure during the 2003 session of the General Assembly. Staff was directed by the Board to draft “PERAChoice” legislation and have it ready for the 2003 session as an alternative to any harmful plan choice legislation the may be introduced by others.

  16. Donna Bottenberg gave the Benefits Committee report. No Board action was required.

  17. Joanne Hill reviewed the Audit Committee’s meeting from the previous day. No Board action was required.

  18. Julie Coleman delivered the Investment Committee report for Board information.

  19. Mark Anderson presented the Shareholder Responsibility Committee report. He noted that Colorado PERA had no direct investments in countries that sponsor terrorism. He requested that staff develop a presentation for the Board that could further educate them on this topic.

  20. The Board requested that staff contact Dr. F. Elizabeth Friot, the runner-up in the most recent State Category election and ask if she was interested in filling a vacancy created by Gordon East’s retirement. The seat will be up for election in 2003 for a term to begin July 1, 2003. 

    The Board meeting dates for the remainder of 2002 are as follows:

    October 18 
    November 15

 

Board of Trustees Unofficial Meeting Summary: 
August 16, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their September meeting. Katie Kaufmanis, Communications Director, prepared this summary. 

  1. The Board held a meeting to discuss the Asset and Liability Study on August 16, 2002, with 13 Trustees present. Trustees East, Anderson and Nichols were not present. Valerie Gimple from the Auditor’s Office attended in Trustee Hill’s absence, although Ms. Gimple was not allowed to vote.

  2. Additions to the agenda included Board Standing Committee Assignments and discussion on a letter from the State Treasurer regarding investments in companies that do business in countries that sponsor terrorist activities.

  3. The July 19, 2002 Board Meeting minutes were approved without change.

  4. There was no public comment.

  5. Others in attendance at the meeting included Colorado PERA staff members Meredith Williams, Lana Calhoun, Norm Benedict, Steve Brown, David Maurek, Rob Gray, Roger Young, Jim Liptak, John Spielman, Greg Smith, Kevin Kester, and Jennifer Paquette. Other attendees were Bob and Roberta Kirscht, PERA consultants; Ben Stein of the State Treasurer’s Office; Carole Wright, former Trustee; Paul McElwain, retiree; and Scott Mason of New England Financial.

  6. Meredith Williams, PERA Executive Director, commented on the day’s meeting, reviewed recent activities and responded to Trustee’s questions.

  7. Jennifer Paquette, PERA Director of the Asset/Liability Study Initiative, provided an overview of the Asset/Liability Study to date. 

  8. Barton Waring of Barclays Global Investors (BGI) provided a follow-up discussion on the study. He reviewed the efficient frontier as it relates to asset risk, comparing PERA to the largest 200 public defined benefit plans. BGI recommended a 70% equity-like, 30% fixed income strategy for Colorado PERA at the July Board retreat. 

  9. The meeting was designed to offer different viewpoints on the Barclays study. The following people presented critiques of the Barclays Asset/Liability Study: Norm Benedict, PERA Deputy Executive Director of Investments; Christopher Levell, Mercer Investments Consulting; Allan Emkin, Pension Consulting Alliance; Carl Hess, Watson Wyatt (via phone); William Fornia, Buck Consulting (via written comments).

  10. Trustee Kelly made a motion to direct staff to develop models that lower equity exposure to 70%, 75%, and 80%, taking into consideration the risk involved at each level. Staff was also asked to develop a timeline in which to implement each option for the Board’s Investment Committee consideration in September. The motion was seconded by Trustee Santisteven-Feeback and passed. 

  11. The Chair reviewed the proposed committee assignments that were accepted as proposed.

  12. Ben Stein of the Treasurer’s Office presented the Board with a letter from the Treasurer requesting that the Board review investment practices for companies who do business in countries that support terrorism. The issue was assigned to the Shareholder Responsibility Committee for further study.

  13. The Board meeting dates for the remainder of 2002 are as follows:
    September 20
    October 18
    November 15


Board of Trustees Unofficial Meeting Summary: 
Board Retreat July 17 - 19, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their August meeting. Katie Kaufmanis, Communications Director, prepared this summary. 

  1. The Board held their annual retreat at Copper Mountain on July 17 - 19, 2002, with all Trustees present. Trustee Coffman left the retreat on Friday morning before the official Board meeting began. 

  2. On the evening of Wednesday, July 17, the Board attended a presentation by Tom Cavanaugh of Buck Consultants regarding pension trends in the United States.

  3. On Thursday, July 18, the Board reconvened and reviewed a slide presentation by Buck Consultants Dave Slishinsky, Flick Fornia and Tom Cavanaugh on defined contribution plan design options.

  4. Also on Thursday, the Board received information on the Asset/Liability Study being performed by Barclays Global. Barton Waring and Cathy Taylor of Barclays Global briefed the Board on the progress of the study. The Board discussed the report and the asset allocation options related to the information presented, but took no action.

  5. On Friday, July 19, the Board met to continue discussion on pension policy, the Asset/Liability Study, and DC plan design. They then convened for their regular meeting at11:00 a.m.

  6. The May 24, 2002 Board Meeting minutes were approved without change.

  7. Steve Brown, Deputy Executive Director of Support Services reviewed the recent Board election results. Donna Bottenberg was re-elected to the Board to serve a four-year term from the State Division, and Kim Natale was re-elected to the Board to serve a four-year term from the School Division. 

  8. There was no public comment.

  9. The Executive Committee approved the May 24, 2002 Executive Committee minutes, reviewed the May 31, 2002 un-audited Financial Statements, the June 30, 2002 Budget Reports, and the current status of the strategic initiatives. The Committee also discussed the Board meeting schedule.

  10. Meredith Williams, PERA Executive Director, commented on the day’s meeting, reviewed recent activities and responded to Trustee’s questions.

  11. Jennifer Paquette, PERA Initiative Director, provided a portfolio update. Ms. Paquette and Mr. Young were filling in for Norm Benedict who was in Denver speaking at the Governor’s Economic Conference. 

  12. Rob Gray, PERA Director of Government Relations, reviewed the 2003 MatchMaker computations. The Board approved the MatchMaker rates for 2003 as follows: 2% for State and School Division and Municipal Division members, and 6% for Judicial Division members.

  13. Jennifer Paquette recapped discussion on the previous day’s Asset/Liability Study presentation for Barclays Global. Staff was directed to obtain additional studies by other consultants in preparation for a single topic Board meeting in August. (August 16)

  14. Rob Gray reviewed discussion on the previous day’s presentation on DC Plan Design. Staff was directed to calculate costs and the impact on the defined benefit plan and to develop a comprehensive package for Board consideration in September on defined contribution plan choice and any modifications to the existing defined benefit plan. 

  15. David Maurek, Manager of Strategy and Innovation, briefed the Board on the status of the Mission and Vision Statement. The Board approved, with a minor change, the new Mission and Vision Statements.

  16. Under Other Business, Vice Chair Jim Casebolt delivered a report on his recent meetings with the Bank of Ireland. Trustee Gordon East announced his anticipated retirement from the State and the Board of Trustees.


  17. The Board meeting dates for the remainder of 2002 are as follows:
    August 16 (Special meeting for discussion/action on the Asset/Liability Study)
    September 20
    October 18 
    November 15

Board of Trustees Unofficial Meeting Summary
 May 24, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their July meeting. Katie Kaufmanis, Communications Director, prepared this summary.

  1. The Board met on May 24, 2002, with 13 Trustees present.

  2. The agenda was approved with minor changes under Other Business.

  3. The April 19, 2002 Board Meeting minutes were approved with corrections to the Member Appeal and General Counsel Report Sections.

  4. Guests attending the meeting included Bob Kirscht, Roberta Kirscht, Beth Minahan, Ben Stein of the State Treasurer’s Office; and Doug Whynes.

  5. Doug Whynes, a state employee, expressed his concerns regarding the Board of Trustees election process.  He wanted more information on the candidates including statements on key issues facing PERA.  The Board Chair advised Mr. Whynes that the Board would consider his issue when the Board evaluated the election process.

  6. The Executive Committee approved the April 19, 2002 Executive Committee minutes, reviewed the March 31, 2002 un-audited Financial Statements, the April 30, 2002 Budget Reports, and the current status of the strategic initiatives.  The Committee also discussed the Board meeting schedule and the 2002 Board retreat.

  7. Meredith Williams, PERA Executive Director, introduced Anne Bandy, the Director of Customer Service, and her staff.  He commended them for the reduction in hold time for those calling the Customer Service Center.  Mr. Williams also outlined participation rates in MatchMaker that show that 52% of those eligible are taking advantage of the program.  However, as monthly income increases, so does participation.  

  8. Deputy Executive Director of Investments Norm Benedict provided a portfolio update.  He provided the Board with a brief update on DataPlay, a company in which PERA had invested, that had received some national press.  Mr. Benedict then responded to Trustee questions.  

  9. Rob Gray, PERA Director of Government Relations, provided the Board with an overview of the legislative session.  Most notable was the defeat of HB 1184 in committee.  Bob Kirscht applauded the efforts of the Ambassadors, Meredith Williams, and Lana Calhoun during the legislative session.  The Chair thanked the entire lobbying team for their work.  Mr. Gray also noted that talks with the Denver Public School Retirement System continue.  

  10. Rob Gray, PERA Director of Government Relations, reviewed the PERA actuarial schedule and introduced the actuaries.  The actuaries presented the 2001 Actuarial Valuation and responded to Trustee’s questions.

    Highlights of the report included emphasis on the long-term nature of the PERA fund, and statistics about members.  The number of active members compared to retirees has decreased to 3.0 from 3.8 from nine years ago.  The market value of the fund was $27.25 billion at the end of 2001.  The actuaries estimated the 2001 unfunded liability of PERA at $432 million.  Losses from the fund were attributed to changes in actuarial assumptions adopted by the Board in 2001, a decline in the value of assets due to a downturn in the financial markets (-7.7%), and a higher than predicted increase in liabilities.  In conclusion, the actuaries stated that even with actuarial losses between December 31, 2000 and December 31, 2001, PERA continues to be in sound condition.  

  11. Rob Gray, PERA Director of Government Relations and Chair of PERA’s DC Plan Design Initiative Taskforce, reviewed the background of this project and introduced Dave Slishinsky, William Fornia, and Randi Lewis from Buck Consultants. The actuaries presented the results of their work to date and respond to questions.  They outlined the objectives of “PERA Choice” to include keeping any options simple, retaining the current PERA design, creating new plan alternatives, and adding multiple choice options.  Discussion continued on how to make sure any option would have a guaranteed “safety net,” disability and healthcare features, be able to retain PERA Board control of the new component, and how to minimize adverse selection by members. The Board will further review this item at their retreat in July.

  12. Mark Anderson, Shareholder Responsibility Committee Chair, reviewed the previous day’s committee meeting and responded to questions.  He noted that the committee had made minor changes to language in the committee’s charter and this version had been adopted.  He also reported on the committee’s discussion of ISS and proxy voting procedures, and reviewed the committee’s new internal web site with staff.  The committee will review the Shareholder Responsibility Policy Statement and proxy voting policy at their September meeting.  

  13. Joanne Hill reviewed the Audit Committee’s meeting and noted that the Arthur Andersen audit was near completion.  The Office of the State Auditor will review the audit by Arthur Andersen.  Ms. Hill stated that the Denver office of Arthur Andersen had lost no staff and that the firm was not yet completely merged with KPMG.  Ms. Hill said that the Audit Committee recommended the appointment of Don Stevens as another external representative to the committee.  The Board endorsed the recommendation.  

  14. The Board voted unanimously to go into closed executive session to discuss the Executive Director’s evaluation.  Only Board members and John Spielman, Director of Internal Audit, participated in the executive session.  When the Board returned from Executive Session, they approved the Executive Director’s performance bonus of 10% of current base salary for 2001.  The Board then made a motion to increase the Executive Director’s annual base salary to $220,000 (June 1, 2002 – May 31, 2003).  

  15. Chair Kim Natale reviewed the Mission and Vision statements drafted by the Board at their mini-workshop the preceding day.  He noted that the statements would be finalized at the Board retreat in July.  Board members would like Guiding Principles included for discussion at the July meeting.  

  16. Trustee Santistevan-Feeback expressed her concern that the state’s budget problems would negatively impact the State and School Division Trust Fund and asked that a study be performed to estimate the impact of the state’s withholding or reducing employer contributions to the Fund.  Staff will request such an actuarial study be completed by September 1.  

  17. The Chair noted that August 16 would be available if the Board required an additional meeting.  The Board requested that staff prepare a list of all documents Trustees would need to bring for the retreat.  Ed Bohac stated that the cost to purchase service may need to be discussed at the retreat.  Gordon East requested that a letter be sent to the Ambassadors thanking them for their help during the legislative session.  

  18. The Board meeting dates for 2002 are as follows:
    July 17-19 (Retreat)
    September 20
    October 18       
    November 15

The next Board of Trustees meeting will be held on July 19, 2002 at the conclusion of the Board retreat.

Board of Trustees Unofficial Meeting Summary
April 19, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their May meeting. Katie Kaufmanis, Communications Director, prepared this summary. 

  1. The Board met on April 19, 2002, with 15 Trustees present. 
  1. The agenda was approved without changes.
  1. The March 15, 2002 Board Meeting minutes were approved without change.
  1. Buzz Fromm of New England Financial Advisors commented about the current rate for purchasing service credit and whether or not there would be a window if any changes were made to the rate.
  1. Guests attending the meeting included Bob Kirscht, Roberta Kirscht, Ben Stein of the State Treasurer’s Office; Curt Eckhardt, PERA Ambassador; Buzz Fromm, New England Financial Advisors; David Winfrey, PERA retiree.
  1. The Board heard an administrative appeal by Donald W. Reeb.  Christopher Forrest of the law firm of Hamilton and Faatz acted as counsel to the Board. Greg Smith presented the position of Colorado PERA. Mr. Reeb presented his position and the relief that he was seeking to the Board. Mr. Smith set forth the PERA Administration position and responded to Mr. Reeb.

At the conclusion of Mr. Smith’s comments, the Board went into executive session with its counsel, Mr. Forrest, to consider the respective positions, evidence in the existing record and deliberate with regard to the Final Board Action to be taken on Mr. Reeb's appeal. 

The Board reconvened and Scott Noller made the following motion which was seconded by Ed Bohac:  I move that the Board adopt and ratify the Findings of Fact, Conclusions of Law and Decision of the Administrative Review Panel to deny Mr. Reeb’s request to modify the amount of his monthly service retirement benefit.  The motion was voted upon and passed unanimously.

  1. The Executive Committee approved the March 15, 2002 Executive Committee minutes, reviewed the February 28, 2002 un-audited Financial Statements, the March 31, 2002 Budget Reports, and the current status of the strategic initiatives.  The Committee also discussed the Board meeting schedule and the 2002 Board retreat.  
  1. Meredith Williams, PERA Executive Director, commented on the Board meeting activities, gave his monthly report, highlighted the “Year in Review” report, and responded to Trustee’s questions.  He noted that the addition of five Customer Service Representatives had noticeably reduced wait time for those members and retirees who called the Center.  He also stated that definitive information on MatchMaker and 401(k) participation rates would be presented at the May meeting.
  1. Deputy Executive Director of Investments Norm Benedict provided a portfolio update.  He noted that a gradual improvement in the economy was evident, with inflation not being an issue, signs of a recovery in the manufacturing sector, and an increase in capital spending on technology.  Mr. Benedict then responded to Trustee questions.
  1. Rob Gray, PERA Director of Government Relations, briefly reviewed legislative developments and responded to Trustee’s questions.  He noted that quarterly meetings with the state Department of Personnel had been scheduled.  Mr. Gray also told the Board that Colorado PERA had received qualification letters from the Internal Revenue Service for all divisions and the 401(k) Plan.
  1. Russ Kuhns, CEO, R.V. Kuhns & Associates, Inc., reviewed PERA’s 2001 investment performance and responded to Board questions.  Colorado PERA was measured against 59 of the largest public pension funds in the United States with combined assets of over $741 billion.  He noted that over the past five years, the Colorado PERA portfolio had performed in line with the median Large Public Fund, while taking median to slightly above median risk.  Mr. Kuhns said the total portfolio is well diversified among low correlated asset classes, which should enable Colorado PERA to achieve above median returns over long periods of time.  During calendar year 2001, Colorado PERA had a return of –7.7% versus –3.2% for the median fund (gross of fees).  The underperformance was due to PERA’s high equity and high alternative asset exposure and low fixed income exposure.
  1. Greg Smith, PERA General Counsel, presented his report and responded to Trustee’s questions. This portion of the meeting was conducted in an executive session for the purposes of receiving a briefing from the General Counsel regarding pending litigation and legal issues facing PERA.  In addition to Trustees and the General Counsel, the Executive Director, the three Deputy Executive Directors, and the Directors of Communications, Government Relations and Strategy & Innovation participated in the executive session for the purposes of facilitating the presentation. The Board reconvened in open session after the lunch break.
  1. Julie Coleman, Benefits Committee Chair, reviewed the previous day’s meeting of the Benefits Committee.  She noted that the Member Services Benchmarking Committee had made their presentation to the Committee.  The Benefits Committee will review this report and discuss recommendations at their next Committee meeting in September.  Ms. Coleman also stated that the Committee had discussed Trustee Bohac’s recommendation that a portion of purchased service be dedicated to the Health Care Trust Fund.
  1. Patricia Kelly, Investment Committee Chair, reviewed Thursday’s meeting of the Investment Committee and responded to questions.  She noted that the Committee had received a report by Terry Dennison of Mercer that outlined transaction costs.  The Investment Committee also participated in a workshop presented by Barton Waring of Barclays Global Investors related to the Asset/Liability Study.
  1. Donna Trujillo, PERA Staff Chair of the Strategic Direction Task Force, presented a brief outline of the completed report.  The Board was requested to review the report and prepare for discussions at a meeting on May 23, 2002, on this topic.  No Board action was necessary.  This matter will be an action item on the May Board agenda.
  1. David Maurek stated that the evaluations for the Executive Director would be mailed by May 1 to all Board members.  He reviewed the elements and components of the evaluation.  Trustee East said he had met with former state Senator Tillman Bishop and had discussed the idea of a constitutional amendment to protect PERA.  Rob Gray and Bob Kirscht will follow up with Sen. Bishop.  It was announced that the Chair and Executive Director would not be attending the Pensions 2000 conference, and that the May meeting dates would stand as rescheduled.

17.   The Board meeting dates are as follows:

May (23) 24
July 17-19 (Retreat)
September 20
October 18     
November 15

 The next Board of Trustees meeting will be held on May 24, 2002.

Board of Trustees Unofficial Meeting Summary
March 15, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their April meeting. Katie Kaufmanis, Communications Director, prepared this summary. 

  1. The Board met on March 15, 2002, with 16 Trustees present. 
  1. The Chair introduced Greg Smith, PERA’s new General Counsel. It was noted that Meredith Williams, Executive Director, would not be in attendance at the meeting.
  1. The agenda was approved with minor changes, primarily having to do with the order in which items would be heard.
  1. The February 15 and February 20, 2002 Board Meeting and Special Board meeting minutes were approved without change.
  1. Ron Brady, President of the Colorado Education Association (CEA) read a letter from the CEA Board of Directors stating their opposition to any reduction in the State’s contribution to PERA to balance the State’s budget. He also thanked the Board of Trustees for their prompt efforts in communicating with the PERA membership on this issue. Board Chair Kim Natale thanked CEA for their interest and cooperation shown on previous legislative topics and announced that H.B. 1184 had been defeated in the Appropriations Committee earlier in the morning.
  1. Guests attending the meeting included Bob Kirscht, Roberta Kirscht, and Ben Stein of the State Treasurer’s Office.
  1. The Executive Committee approved the February 15, 2002 Executive Committee minutes, reviewed the January 31, 2002 un-audited Financial Statements, the February 28, 2002 Budget Reports, and the current status of the strategic initiatives. The Committee also discussed the Board meeting schedule and the 2002 Board retreat. The Executive Committee recommended that there be two topics for discussion at the annual retreat that included DC plan design issues and the asset/liability study. The Committee of Chairs was also asked to meet during a break in the day’s meeting.
  1. David Maurek, Manager of Strategy and Innovation, presented the Executive Director’s report. He commented on a variety of recent PERA activities such as trends in purchasing service, refunds, and the status of items in the Strategic Plan. He also responded to Trustee’s questions.
  1. Deputy Executive Director of Investments Norm Benedict provided a portfolio update. He noted that unemployment was down and that inventories had leveled off. The first quarter GDP looked positive and the market has improved. He stated that the index tilt fund had been rebalanced and that the real estate division was researching income-producing industrial properties.
  1. Mark Anderson, Shareholder Responsibility Committee Chair, reported that the Committee had met the day before and had reviewed the charter and policy statement and that they were preparing drafts of these items to be presented at their next meeting in May. The Committee reviewed proxy voting policies. The Committee also reviewed the Hewlett-Packard/Compaq merger because staff had recommended voting against the action in conflict with the outside consultant’s recommendation. The Board directed the staff to vote against the merger.
  1. The Health Care Ad Hoc Committee report was delivered to Trustees at last month’s meeting. The Board approved the recommendations of the committee as presented and noted that further items for discussion and research would be directed to the Benefits Committee.
  1. The Investment Philosophy Committee report was delivered to Trustees at last month’s meeting. The Board approved the recommendations of the committee as amended with minor comments from the Chair.
  1. Lana Calhoun demonstrated the Benefits Division work process computer program for the Trustees and responded to questions.
  1. Greg Smith, PERA General Counsel, briefed the Board on his start up functions for PERA. He noted that he was working with outside counsel to establish a trademark for the new PERA logo. He will also be preparing a litigation summary for the Board’s use.
  1. Steve Brown, PERA Deputy Executive Director, Support Services, reviewed the current status of the Board of Trustees election for 2002.There are two candidates in each race for the State and School Divisions. There is only one candidate for the race for the Municipal Division.

State Division (1 seat)

  • Donna Bottenberg, University of Northern Colorado
  • F. Elizabeth Friot, Metropolitan State College of Denver

School Division (1 seat) 

  • J. Kim Natale, Jefferson County Public Schools R-1
  • Mark Whitney, Adams County School District #50

 Municipal Division

  • Mark Anderson, City of Colorado Springs

The Board approved Mark Anderson’s appointment for the four-year Municipal Division position on the Board of Trustees for the term beginning July 1, 2002, since he is unopposed. Staff was directed to halt the election process for this position by not sending ballots to the members of the Municipal Division.

  1. The Committee of Chairs approved the travel of Vice Chair Jim Casebolt to the Bank of Ireland later this year. The annual evaluation of the Executive Director will be scheduled for the May meeting.
  1. Anna J. Sullivan, Executive Director, Nebraska Public Employees Retirement Systems gave a presentation on the pension plan design used at Nebraska PERS.
  1. Rob Gray announced that H.B. 02-1184 had been defeated in the House Appropriations Committee earlier in the day. He noted that Reps. Berry and Lawrence had joined the Democrats on the committee and voted to oppose the bill. S.B. 02-145 would be heard the following week. Rob Gray also stated that the State’s contribution rate reduction appeared not to be included in the efforts to balance the budget. Discussion then occurred on the possible Denver Public Schools’ Retirement System merger with PERA. Mr. Gray noted that it was unlikely to happen this year because of the State’s budget shortfall.
  1. The Board directed staff to write letters to the Ambassadors and to those who voted against H.B. 02-1184 thanking them for their efforts.
  1. The Statement of Strategic Direction item and the Year in Review were rescheduled for presentation at the April meeting.

21. The meeting dates are as follows:

April (18) 19
May 24
July 17-19 (Retreat)
September 20
October 18
November 15

The next Board of Trustees meeting will be held on April 19, 2002.

Board of Trustees Unofficial Meeting Summary
February 15, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their March meeting. Katie Kaufmanis, Communications Director, prepared this summary. 

  1. The Board met on February 15, 2002, with 15 Trustees present. Trustee Gordon East did not attend the meeting. 
  1. The Chair introduced Anne Bandy, the new Director of Customer Service. He also recognized Becky Barnett and Drucie Haddock who had recently graduated from the Denver University Daniel College of Business Executive Leadership Program. Ms. Barnett was honored as the Outstanding Graduate and spoke at the graduation ceremony.
  1. The agenda was approved without change.
  1. The January 18, 2002 Board Meeting minutes were approved without change.
  1. There was no public comment. Guests attending the meeting included Curt Eckhardt (Ambassador), Bob Kirscht, Roberta Kirscht, Beth Minahan, and Ben Stein of the State Treasurer’s Office.
  1. The Executive Committee approved the January 18, 2002 Executive Committee minutes, reviewed the December 31, 2001 financial report and the December 2001 budget report, in addition to checking the status of the strategic plan initiatives. The Committee also discussed the search efforts underway to fill the General Counsel’s position, the Board meeting schedule and the 2002 Board retreat. The Committee also reviewed the Board meeting agenda. The Vice Chair noted that an offer to a General Counsel candidate might be made soon. It was announced that the Committee of Chairs approved the Chair’s and Executive Director’s Pensions 2000 trip to Eastern Europe and Russia. The May Board meeting was rescheduled for Friday, May 24.
  1. Meredith Williams gave the Executive Director’s report. He reviewed membership trends and noted that the public relations strategy with the new corporate identity is becoming evident with new publications.
  1. Deputy Executive Director of Investments Norm Benedict provided a portfolio update. He noted that economic stabilization was beginning to be reflected in the market. He stated that the sector index portfolio in equities had been rebalanced. Mr. Benedict informed the Board that PERA’s losses in Enron have been $9 million in two index portfolios. He also stated that since 1993, Colorado PERA has made a net profit over $21 million on Enron holdings.
  1. Rob Gray provided the Board with an update of current legislative activities, including a review of H.B. 02-1184 and S.B. 02-145.Bob Kirscht commended the Ambassadors on their legislative contact efforts.
  1. David Maurek, Manager of Strategy and Innovation, introduced the team who had worked on the Investment Philosophy Committee of the Strategic Plan. The Chair of the Ad Hoc Committee, Julie Coleman, presented the item to the Board for their review. A final vote will be taken at the March meeting. Comments were to be directed to Mr. Maurek or Roger Young.
  1. Vice Chair Jim Casebolt presented the Ad Hoc committee recommendations on Health Care. He thanked staff for their help in preparing the report. He asked the Board to take the report and send comments on the report to Rob Gray or to himself. Action on the report will be taken at the March meeting. The report recommends that PERA continue its efforts in the health care arena.
  1. The Audit Committee gave their report. Vice Chair Casebolt excused himself from the discussion of Arthur Andersen because Arthur Andersen employs his son. Trustee Joanne Hill reported that the Audit Committee reviewed whether or not PERA should continue using Arthur Andersen and review the issues regarding credibility and confidence after the current audit is completed. The State Auditor’s Office will review the audit in terms of scope and sample sizes, and make sure appropriate standards are followed. The Board recommended that staff communicate with members and retirees and edited a letter staff had drafted. The Audit Committee will be adding a new outside member to the committee due to a vacancy. The Committee announced that the Standards of Ethical Conduct submissions had been reviewed and they had nothing significant to report to the Board.
  1. Rob Gray briefed the Board on Senate Joint Resolution 4.He noted that after hearing from the Auditor and Treasurer representatives on the Board that staff would work to get a resolution that makes sense and is directed at the appropriate audiences.
  1. The Benefits Committee reported that they had received a presentation on the managed disability program and attended a mini-workshop on how benefits are calculated. Deputy Executive Director for Benefits Lana Calhoun noted that discussions with the state regarding PERACare continue.
  1. The Investment Committee made the following motions that were approved by the Board:1) To give the Executive Director discretion to invest in not more than $100 million in alternative investments and real estate, and 2) to give the Executive Director authorization to exceed the allocation range up to two percent for any asset class where that circumstance is due solely to changes in the value of the total PERA portfolio. The Executive Director shall report to the Board/Investment Committee in a monthly email on the use of this authority and the amount that a given asset class is above its maximum. This exemption does not apply to the 65 percent at cost statutory limitations for total equity securities.
  1. It was announced that Vice Chair Jim Casebolt was scheduled to be a speaker at Stanford’s Fiduciary College.
  1. The meeting dates are as follows:

March 15
April 19
May 17 (rescheduled for May 24)
July 17-19 (Retreat)
September 20
October 18
November 15
December 20

The next Board of Trustees meeting will be held on March 15, 2002.

Board of Trustees Meeting Summary
January 18, 2002

The official minutes will be posted after they are approved by the PERA Board of Trustees at their February meeting. Katie Kaufmanis, Communications Director, prepared this summary. 

  1. The Board met on January 18, 2002, with 14 Trustees present. Trustees Gary Kasson and Donna Bottenberg did not attend the meeting.
  1. The agenda was approved with no changes.
  1. The December 14, 2001 Board Meeting minutes were approved without change.
  1. The Chair acknowledged Kim Johnson, General Counsel, and noted that this would be his last official meeting. The Board recognized Mr. Johnson and thanked him for his efforts during his tenure.
  1. The Chair also announced that PERA had been awarded the Certificate of Achievement for Excellence in Financial Reporting for its comprehensive annual financial report by the Government Financial Officers Association. The Certificate of Achievement is the highest form of recognition in the area of public employee retirement plan accounting and financial reporting, and its attainment represents a significant accomplishment.
  1. There was no public comment. Guests attending the meeting included Bob Kirscht, and Ben Stein of the State Treasurer’s Office.
  1. The Executive Committee approved the December 14, 2001 Executive Committee minutes, reviewed the November 30, 2001 financial report and the November 2001 budget report, in addition to checking the status of the strategic plan initiatives. The Committee also discussed the search efforts underway to fill the General Counsel’s position, the Board meeting schedule and the 2002 Board retreat. The Committee also reviewed the Board meeting agenda. The Chair and Vice Chair solicited topics and suggestions for where to hold the annual Board retreat.
  1. Bob Kirscht provided the Board with an update of current legislative activities, including the House and Senate Finance Committee Hearings and a review of H.B. 02-1184.It was noted that H.B. 02-1184 was being called the “Governor’s bill” and discussion centered on strategy for defeating this bill. Rob Gray reviewed the failed District Attorney’s bill (S.B. 02-106) and conveyed information on Sen. Matsunaka’s desire to solve a perceived teacher shortage in rural areas by eliminating the 110-day work rule.
  1. Rob Gray noted that discussions with Denver Public Schools Retirement System continue. They are reviewing the costs that would be associated with joining PERA. Mr. Gray noted that there was no bill yet and the estimated cost to the state of this proposal might be around $14 million annually.
  1. PERA staff has also been discussing the Patrol Protective Association’s concerns regarding Trooper retirement provisions.
  1. Meredith Williams, Executive Director, reviewed November’s statistics. He noted that Kevin Kester, Director of Alternative Investments has been named program director for the Institutional Limited Partners Association (ILPA). He also stated that Steve Brown, Deputy Executive Director for Support Services, was named to the Government Finance Officers Association committee that develops policy for public pension plans. Mr. Williams also reported on a recent trip to a conference in Phoenix where he and four trustees met with Arizona retirees. Over 200 retirees attended the meeting.
  1. Deputy Executive Director of Investments Norm Benedict provided a portfolio update. He said that the Federal Reserve would meet again later in January and a .25 percent reduction in the prime interest rate was predicted. Inflation in 2001 was less than 2 percent, which is good news, although Gross Domestic Product is expected to be only 1.1 percent in 2001.
  1. Investments staff is slowly reducing positions in actively managed portfolios and seeking opportunities in mid and small cap stocks. Mr. Benedict reviewed an alternative investment that was made with ITU Ventures for $10 million to invest in technology transfers from Colorado universities.
  1. Steve Brown, Deputy Executive Director for Support Services, presented a semi-annual report of the Support Services operation. The presentation focused on security issues and included a review of business recovery facility operations.
  1. David Maurek, Manager of Strategy and Innovation, reviewed the strategic plan item timeline with the Board. He noted that the Member Services and Performance Benchmark item was being delayed due to the hiring of the new Customer Service Director. Both the Health Care Study and the Investment Philosophy items are on track for presentation to the Board in February. The Asset/Liability Study RFP is on the PERA Web site and will appear in Pensions and Investments. The deadline for proposals is Feb. 8, 2002.The Study of DC Plan Design Issues will be moved to the September Board meeting.
  1. Board members discussed PERA’s annual audit conducted by Arthur Anderson. Arthur Anderson is hired by the State Auditor’s Office to conduct the audit at PERA. PERA staff is working with the firm to perform the annual 2001 audit.
  1. Colorado law requires that the Board officially designate a public meeting schedule be officially published. Scott Noller moved, seconded by Ed Bohac, that the Board authorize the formal publication of the previously adopted 2002 Board Meeting Schedule in the PERA Lobby at 1300 Logan Street, Denver, Colorado, and on the PERA website. The motion passed. The meeting dates are as follows:

February 15
March 15
April 19
May 17 (rescheduled for May 20)
July 17-19 (Retreat)
September 20
October 18
November 15
December 20

The next Board of Trustees meeting will be held on February 15, 2002.

Official Minutes of January 18, 2002, meeting.

Archived Board Meeting Excerpts:
2001 | 2000


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