TRS Board of Trustees Meeting - trs.texas.gov

1 TRS Board of Trustees Meeting April 19-20, 2018 TEACHER RETIREMENT SYSTEM OF TEXAS Meeting Board OF Trustees AGENDA April 20, 2018 8:30 TRS East Building, 5th Floor, Boardroom. All or part of the April 20, 2018 Meeting of the TRS Board of Trustees may be held by telephone or video conference call as authorized under Sections and of the Texas Government Code. The Board intends to have the presiding officer and a quorum physically present at the following location, which will be open to the public during the open portions of the Meeting : 1000 Red River, Austin, Texas 78701 in the TRS East Building, 5th Floor, Boardroom. NOTE: The Board may take up any item posted on the agenda during its Meeting on April 20, 2018, beginning at the time and place specified on this agenda. The open portions of the April 20, 2018, Board Meeting are being broadcast over the Internet. Access to the Internet broadcast of the Board Meeting is provided at 1.

2 Call roll of Board members. 2. Consider the following administrative matters Jarvis V. Hollingsworth: A. Approval of the February 14-16, 2018 proposed Meeting minutes B. Setting, rescheduling, or canceling future Board meetings. 3. Provide an opportunity for public comment Jarvis V. Hollingsworth. 4. Consider the TRS of Texas Experience Study Findings and Recommendations, including considering the Return Assumption Brian Guthrie; Joe Newton, Gabriel, Roeder, Smith & Co. 5. Receive an update on the TEAM Program Brian Guthrie and Chet Henry. 6. Receive a presentation from the TEAM Program Independent Program Assessment (IPA) Vendor Michael Johnson, Bridgepoint Consulting. 7. Review and discuss the Executive Director's report on the following matters Brian Guthrie: A. Review of ED Goals and Objectives for plan year 2018; Administrative operational matters, including: updates on financial, audit, legal, staff services, special projects, long-term space planning, strategic planning and personnel matters.

3 B. Board operational matters, including a review of draft agendas for upcoming meetings. C. Event notices or reminders; holiday and other schedules of interest; Board member, employee or other individual recognitions; and expressions of thanks, congratulations, or condolences. 8. Receive an overview and history of the evaluation process for the Executive Director, Chief Audit Executive and Chief Investment Officer Janet Bray. 9. Receive a presentation from Focus Consulting on the evaluation of the Executive Director, Chief Audit Executive and Chief Investment Officer Keith Robinson, Focus Consulting. 10. Review the Executive Performance Incentive Pay Plan for the plan year beginning July 2018 Janet Bray. 11. Receive the report of the Benefit Committee on its April 19, 2018 Meeting and consider adoption or acceptance of the following: Committee Chair. A. Premiums and plan designs for TRS-Activ eCare preferred-provider organization (PPO) plan options; B.

4 Premiums and plan design for the TRS-ActiveCare HMO plan options; C. Benefit Payments for December 2017 February 2018; and D. Medical Board Meeting Minutes. 12. Receive the report of the Budget Committee on its April 19, 2018 Meeting and consider proposed amendments to FY 2018 Budget for Commission Credits and TRS -Care Committee Chair. 13. Receive the report of the Strategic Planning Committee on its April 19, 2018 Meeting Committee Chair. 14. Receive the report of the Policy Committee on its April 19, 2018 Meeting and consider the following: Committee Chair A. Approving proposed amendments to the Litigation Policy; B. TRS Key Employee Determinations; C. trustee Ethics Policy and Position Description; D. Employee Ethics Policy, Conflict of Interest Disclosure Statement; and E. Disciplinary Action Disclosure Statement. 2 15. Receive the report of the Audit Committee on its April 19, 2018 Meeting Committee Chair. 16. Receive the report of the Investment Management Committee on its April 19, 2018 Meeting and consider adopting a Resolution selecting an Advisor consistent with of the Investment Policy Statement; and consideration of a finding that deliberating or conferring on the selection of the Board Advisor in open Meeting would have a detrimental effect on the position of the retirement system in negotiations with a third person Committee Chair.

5 17. Discuss statutory divestment applicability and requirements Carolina de On s and Brian Guthrie. 18. Review the report of the General Counsel on pending and contemplated litigation, including updates on litigation involving benefit-program contributions, retirement benefits, health-benefit programs, investment matters and open records Carolina de On s. The Board may convene in Executive Session under the following but not limited to: A. Texas Government Code, Section : Consultation with Attorney; B. Texas Government Code, Section : Deliberation Regarding Real Property; C. Texas Government Code, Section : Personnel Matters Relating to Appointment, Employment, Evaluation, Assignment, Duties, Discipline, or Dismissal of Officers or Employees including but not limited to the Executive Director, Chief Audit Executive, Chief Investment Officer. D. Texas Government Code, Section : Deliberation Regarding Security Devices or Security Audits; E.

6 Texas Government Code, Section : Deliberation Regarding Security Devices or Security Audits; or F. Texas Government Code, Section : Applicability of Certain Laws; G. Texas Government Code, Section : Certain Consultations Concerning Investments. 3 TAB 2 Minutes of the Board of Trustees February 14-16, 2018 The Board of Trustees of the Teacher Retirement System of Texas met on February 14-16, 2018, in the UT Rio Grande Valley Ballroom Building in Edinburg, Texas. The following Board members were present: Jarvis Hollingsworth, Chair Joe Colonnetta David Corpus John Elliott Greg Gibson Christopher Moss Dolores Ramirez Nanette Sissney James D. Nance Others present: Brian Guthrie, TRS Tim Lee, TRTA Ken Welch, TRS Bill Barnes, TRTA Don Green, TRS Nancy Byler, TRTA Carolina de On s , TRS Ronnie Jung, TRTA Katrina Daniel, TRS Dora Cackley, BARSEA Janet Bray, TRS Gerald Albrecht, TRTA Jerry Albright, TRS Rosalon Reyna, TRTA Barbie Pearson, TRS Richard Sanchetz Amy Barrett, TRS Patricia Macias, TRTA Rebecca Merrill, TRS Gracie Alvear, ERTA Heather Traeger, TRS Alrene Ready, LC Katherine Farrell, TRS Maria Suramillo, TRS Caasi Lamb Noemi Diaz Bald, Hgn Mid Valley RTA Chet Henry, TRS Nadine Woodall, Hgn Mid Valley RTA Steve Huff, Reinhart Boerner Van Deuren Tom Bald, HGN Mid Valley RTA Steve Voss, Aon Hewitt Fran Plemmons, TRTA Mike McCormick, Aon Hewitt Leroy DeHaven, TRTA Dan Siblik, Gabriel, Roeder, Smith & Company Linda DeHaven, TRTA Joe Newton, Gabriel, Roeder, Smith & Company Marcy Cann, TRTA Michael Johnson.

7 Bridgepoint June Cooper, TRTA Roland Miller, TRTA David A. Gomez, TRTA Margarita Gonzalez, TRTA Janie Cantu, TRTA 1 Ann Fickel, TRTA David Gonzalez, Humana John Grey, TSTA Beaman Floyd, TASA Ruben Suenz, TRTA Michael Bentrott, Aetna Adreana S. Garza, Caremark Ofelia G. Esteeris, TRTA Jose E. Lugo, ERTA Debbie Prukop, TRTA Patty Quinzi, AFT Aaron Bell, TSEU Mr. Hollingsworth called the Meeting to order at 10:16 He welcomed all and thanked trustee Ramirez for hosting the February retreat in the McAllen area. Mr. Hollingsworth thanked the University of Texas Rio Grande Valley (UTRGV) for hosting us. Ms. Trini Yunes, Director of Human Resources at UTRGV, welcomed everyone to the Rio Grande Valley. 1. Call roll of Board members. Ms. Farrell called the roll. A quorum was present. 2. Consider the following administrative items Jarvis V. Hollingsworth: A.

8 Approval of the December 14-15, 2017 proposed Meeting minutes On a motion by Mr. Nance, seconded by Mr. Moss, the Board voted to approve the proposed minutes of the December 14-15, 2017 Board Meeting in accordance with the revisions provided by Mr. Hollingsworth. B. Setting, rescheduling, or canceling future Board meetings. On a motion by Ms. Ramirez, seconded by Mr. Nance, the Board voted to affirm the dates of the future Board meetings. 3. Provide opportunity for public comment Jarvis V. Hollingworth. Ms. Dora Ferias Cackley of the Brownsville Area Retired School Employee Association, spoke against the increase in healthcare premiums, lack of cost of living increase and the possibility of changing from a defined benefit pension to a defined contribution system. Mr. Aaron Bell of the Texas State Employee Union, spoke against a lowered rate of return. Mr. Bell presented the Board of Trustees with a petition against urging the Trustees to reject any recommendation that would negatively impact the funding ratio of the retirement plan and to wait to act until the 2020 experience study.

9 2 Mr. Beaman Floyd, representing the Texas Association of School Administrators, spoke regarding the experience study urging judicious incrementalism in the Trustees approach. Ms. Patty Quinzi, representing American Federation of Teachers in Texas, spoke against the experience study stating it was done ahead of time and does not take into consideration major federal policy changes. Ms. Ann Fickel, representing Texas Classroom Teachers Association, spoke against dropping the assumed rate of return all at once and recommended a gradual approach. Mr. John Grey representing the Texas State Teachers Association, spoke against the .75 percent drop recommended and said he echoed those who spoke before him. Mr. Bill Barnes, the Texas Retired Teachers Association s legislative coordinator and the vice-chair of the Retirees Advisory Committee at TRS, spoke regarding the rising health care costs, lack of cost-of-living raise and the questions of lowering the assumption rate.

10 Mr. Tim Lee, Executive Director of the Texas Retired Teachers Association, spoke to the rate-of-return assumption, stating 7 percent is too low, and how it will affect the long term solvency of the pension trust fund and plan design discussion. 4. Receive an overview of the Board Meeting agenda and theme Brian Guthrie. Mr. Brian Guthrie stated the theme for the February retreat was TRS: One Mission, Many Parts . Mr. Guthrie reviewed TRS Mission Statement and the supporting strategic plan s goals and objectives. He then provided an overview for the next three days and reviewed the specifics of the agenda for the day. 5. Receive an update on the Many Parts and One Mission of TRS Customer Service Janet Bray, Katrina Daniel, Rebecca Merrill and Barbie Pearson Ms. Barbie Pearson discussed the customer service s history and the challenges customer services has faced. Mr. Chris Cutler discussed the technical issues experienced during the cutover from the legacy system to TRUST.