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 6. The Board met on April 6 to hear investment reports and met again on April 7 to conduct the remainder of the meeting agenda.
SYSTEM OPERATIONS
The Board approved the minutes from the February 4, 2025, meeting and established the order of business.
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, 2025.
Interest Credit Rate and Purchase Interest Rate - The interest credit rate for the current fiscal year is 4.0%. The Board set the interest credit rate 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 reviewed the estimated March 31, 2025, investment results. FYTD are 4.8%, and this is helped by the defensive nature of the Systems portfolio.
Husting also reviewed market trends, the System’s portfolio allocation, the effect of volatility on long-term System funding, and the calendar of review of the Systems’ Investment Beliefs.
The global economy is experiencing uncertainty due to Trump tariffs. Staff noted that it is hard to predict how this episode will resolve. Higher inflation now seems more likely along with slower growth and more volatility in investment markets. The S&P 500 index reached an all-time high on February 19 and then declined 10% from that level. International stocks significantly outperformed U.S. stocks in the last quarter and the fiscal year-to-date.
MANAGEMENT REPORT
Employer Services – Stacie Verlues gave the report. This section works with PSRS/PEERS employers. The report focused on the goals of the program in support of employers. Priorities include ensuring accuracy in reporting, employer education, improving the employer Web Portal, and providing excellent customer service.
Legislative Update – Mike Moorefield and Doug Nelson gave the legislative report and began with a review of Board Resolutions, legislative deadlines, and the state budget. Six weeks remain in session and five weeks to complete the budget. State revenues are down. Federal Medicaid funding could decline significantly. Missouri did Medicaid expansion by constitutional IP, so the legislature will not be able to cut Medicaid benefits by bill.
The House budget cut $800 million from Governor’s budget. The Senate budget will increase over the House and will reconcile in conference. The Senate is likely to pass a tax cut bill, HB 594, that has an estimated cost of $400 million. Governor Kehoe favors eliminating the personal income tax and is creating a task force that will consider rewriting the school funding formula. His budget is $300 million short of full formula funding while also diverting $50 million to the private school voucher program.
The Systems are tracking thirty-one priority bills that affect the following topics: investment mandates/system governance, substitute WAR waiver, COLA/retirement multiplier, prohibitions on political contributions, LAGERS omnibus bills, and changes to administrative rules process.
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 firefighter’s retirement systems.
The PSRS WAR substitute waiver has crossed chambers in four bills and is likely to pass. HB 329 (Willard Haley) requires increases to COLA lifetime cap. The fiscal cost could be large if the System’s experience study indicates significant changes. HB 644 (Bob Bromley) seeks to allow more PSRS retiree hires for shortage positions but is not currently limited to those positions. SB 474 (Maggie Nurrenbern) would provide 2.6% multiplier for 33 years or more of service.
External Audit Contract – The Staff recommended extending WK’s audit contract for the two optional years included in the February 2022 RFP response. An RFP will be issued after June 30, 2026, engagements have been completed. The Board approved the recommendation.
Key accomplishments – Staff reviewed recent staff work in the key areas, including the School Administrators Resource Web Page, the Employer Services Reporting Resources Branding and Web Pages, the new Human Resources Site, the 2025 Compensation Study,
CPI update/COLA review – The Board reviewed the COLA policy and COLA history for the current fiscal year. The current CPI-U is up 1.56% through February 28, 2025. 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%. The new tariffs are expected to raise prices. At this point, it appears likely that eligible retirees will receive a 2.0% COLA in January 2025.
Public Comment – None.
The public meeting adjourned, and the Board went into closed session.