Location: RM 271
Public Employees' Retirement Association
COMMITTEE ON JOINT FINANCE
08:19 AM -- Public Employees' Retirement Association
Mr. Tim O'Brien, the Chairman of the Public Employees' Retirement Association (PERA) Board, made some opening remarks about past executive director Greg Smith. Mr. Ron Baker, PERA Interim Executive Director, and Ms. Amy McGarrity, Chief Executive Officer, discussed various performance benchmarks for PERA. Mr. Baker walked the committee through a presentation (Attachment A). In response to committee questions, Mr. Baker clarified the changes made under House Bill 17-1176.
Discussion continued on HB 17-1176. Mr. Baker discussed the legislation that established and purpose of the Amortization Equalization Disbursement (AED) and the Supplemental Amortization Equalization Disbursement (SAED) contributions.
Mr. Baker continued his presentation. Ms. McGarrity continued the presentation with a discussion of PERA's investment policy. Ms. McGarrity addressed questions about real estate investments.
Ms. McGarrity responded to a question about the assets managed directly by PERA staff. Mr. Baker responded to questions about information PERA publishes about comparative rates of return to other pension funds and private investment funds. Mr. Baker continued the presentation with a discussion about the current status of PERA and discussed proposed changes to PERA. The first change he discussed would redefine the PERA-includable salary from net pay to gross pay. In response to a question from the committee, Mr. Baker said the proposed changes to PERA will not make a change to AED and SAED contributions.
Mr. Baker continued his presentation and discussed additional proposed changes to PERA. Discussion ensued on a proposal to change service credit accrual standard for part-time work. He next discussed proposed changes to the contribution rates of current members and future hires. Mr. Baker responded to a question about why many of the proposed changes are recommended for 2020 rather than sooner. Mr. Baker continued to respond to committee questions about proposed changes to PERA.
Mr. Baker continued his presentation and discussed additional proposed changes to PERA, including increasing the age a member will be eligible for full service retirement to age 65; an increase in the number of years in the highest average salary calculation from three to five years; a reduction in the annual cost of living increase from a cap of 2 percent to 1.5 percent; and the suspension in the annual cost of living increase for current retirees for two years. Mr. Baker responded to committee questions about the proposed changes. He next discussed provisions that would allow PERA to automatically adjust employee and employer contributions and cost of living increases in order to maintain a 30-year amortization period.
Mr. Baker responded to a question about the normal cost for new employees as compared to current PERA members under the proposed changes.