Trustees present
Beth Knes, Chair
Dr. D. Eric Park, Vice-Chair
Chuck Bryant
Allie Gassman
Dr. Nathan Moore
Katie Webb
The Budget and Audit Committee met on April 19. The Board met on April 19 to hear investment reports regarding the Safe Assets Program and the Private Equity and Private Credit Programs. The Board met again on April 20 to conduct the remainder of the meeting agenda.
SYSTEM OPERATIONS
The Board approved the minutes from the February 2, 2026, meeting and established the order of business.
Certification of Election Results – The Board certified the re-election of MNEA members Allie Gassman as an elected PEERS member and Amanda Perschall as an elected PSRS member of the Board of Trustees. The Association appreciates their continuing commitment and service for the Systems along with the employee and retiree members.
Election of Officers - As required by Board regulation, the Board of Trustees unanimously re-elected Beth Knes as Chair and Dr. Eric Park as Vice-Chair to each serve one-year terms starting July 1, 2026.
Interest Credit Rate and Purchase Interest Rate - The interest credit rate for the current fiscal year is 3.5%. The Board set the interest credit rate to continue for next fiscal year at 3.5%, based on staff recommendation. The Board also approved the staff recommendation to set the purchase interest rate for the next fiscal year at the current assumed rate of return of 7.3%.
Staff Recognition – The Board recognized several System staff for their years of service.
INVESTMENTS
Investment Performance Report - Craig Husting from PSRS and Michael Hall from Russell Investments reviewed the preliminary investment results as of March 31, 2026. Returns for the Systems through the third quarter of this fiscal year are 5.4% with assets of $64.4 billion. The Systems also estimated returns of 4.3% in April alone, leading to a FYTD figure of 9.8% and $67.1 billion in assets.
The Systems adopted a policy in February 2026 to allow 3% leverage in asset allocation and will begin implementing that policy in July of this year.
The Board approved changes in investment policies relating to the 3% leverage, digital currencies, and exchange traded funds. The Board also approved policies regarding reporting of personal trading, and personal trading in non-commercially available securities must be pre-cleared. The Board also revised the Internal Compliance Committee.
Husting also reviewed market trends. AI, geopolitics, energy prices, and inflation have produced volatility. Markets were down in March but are back up in April. The System’s portfolio allocation is based on a long-term strategy using diverse, active management and conservative implementation.
AI is disrupting private credit, but this is not yet showing up in fundamentals. U.S. equity markets have been stronger over the last five years, but not emerging markets are higher and strong overall.
Experience study – System staff and representatives from PricewaterhouseCoopers (PwC), presented the results of the actuarial experience studies for the five-year period ended June 30, 2025. The study evaluates the differences between the Systems’ assumed and actual experience over multiple years (typically three to five), with the goal of examining the trends related to actual experience and recommending changes to the actuarial assumptions, if needed. The Systems perform an experience study at least every five years.
The study is used to confirm that the actuarial assumptions used in the annual valuations are: 1) reflective of the actual demographics and behaviors of the members, and 2) reflective of current economic conditions affecting members and their benefits. The overall results indicate that the actual experience of the Systems over the past five years is close to the assumptions that were used but that adjustments are needed.
PwC has proposed recommendations to several of the Systems’ actuarial assumptions. Overall, the study shows that the total contribution rate for PSRS should be increased from 27.13% to 28.58% and results in a funding ratio of 87.1%. The PEERS total contribution rate should increase from 12.93% to 13.23% and results in a funding ratio of 89.1%. These changes also include an increase in the assumed inflation rate to 2.25% and increase in assumed annual COLA rate to 1.45% along with assumptions about payroll growth. These changes will not require changes to district or member contribution rates at this time. PwC has also recommended revisions to the Systems’ mortality tables and improvement scales which are consistent with prior experience and discussions.
The Board is scheduled to act on PwC’s recommendations at the June Board Meeting.
MANAGEMENT REPORT
Employer Services – Staff presented a report on the Employer Services Section. This section works with PSRS/PEERS employers. The report explained how the Systems and employers work together to ensure all payments are made accurately and on time for active members.
Legislative Update – Mike Moorefield and Doug Nelson gave the legislative report and began with a review of legislative deadlines, and the state budget. Four weeks remain in session and three weeks to complete the budget. Income tax revenues are down, possibly due to the capital gains cut enacted last session. The federal OBBBBA includes a financial penalty based on SNAP eligibility error rate that may affect Medicaid funding. Depending on revenues the remainder of the year, the Governor may have to withhold funds at the start of the next fiscal year.
The legislature is poised to adopt the Senate version of HJR 173 to eliminate the income tax while increasing sales taxes. The legislature will face a $2 billion budget deficit when considering the FY 28 budget during next year’s session. The legislature is also considering changes to property tax law, and the Governor’s Task Force is set to recommend revisions to the school funding formula by the end of this calendar year.
The Systems are tracking eleven priority bills this session, including: 1) HB 2144 (Bob Bromley) to increase the Systems’ death benefit to $10,000 (Systems’ cost estimated at $250 million), 2) HB 2396 (Bob Bromley) to allow any PSRS member to retire and work full-time in PSRS-covered work (Systems’ cost estimated at $178 million to $300 million), and 3) HB 2095 (Willard Haley) to offer a 2%, non-cumulative payment to COLA-capped retirees (System cost of $31 million).
HB 147 (Barry Hovis) is the retirement omnibus bill. Sen. Rusty Black will be the handler. The bill now contains SLPS contribution change, LAGERS omnibus, protection of sensitive information, and combines St. Louis firefighters’ retirement systems.
Key accomplishments – Staff reviewed recent staff work in the key areas, including new employee training, completion of the new accounting suite, IT disaster recovery, security testing, Copilot training, hiring a new building engineer, web accessibility improvements, and new investment workflow tools.
CPI update/COLA review – The Board reviewed the COLA policy and COLA history for the current fiscal year. The current CPI-U is up 2.37% through March 31, 2026. Under current policy, the Board will make a COLA for eligible retirees for next year if the cumulative figure at the end of this fiscal year exceeds 2.0%. At this point, it appears likely that eligible retirees will receive a 2.0% COLA in January 2027.
Public Comment – None.
The public meeting adjourned, and the Board went into closed session.