Trustees present
Beth Knes, Chair
Dr. D. Eric Park, Vice Chair
Chuck Bryant
Allie Gassman
Dr. Nate Moore
Amanda Perschall
Katie Webb
SYSTEM OPERATIONS
The Board meeting started at 8:30 a.m. The Board approved the minutes of the December 15, 2025, meeting. The Board also established the order of business.
INVESTMENTS
Investment Performance Report - Craig Husting (PSRS staff) and Michael Hall (Russell) reviewed the December 31, 2025, investment update and provided the most current information. The calendar year 2025 was another good market year for both stocks and bonds. The one-year PSRS/PEERS investment return is 13.3% while the fiscal year return (July 1, 2025, through December 31, 2025) is 5.9%.
Husting discussed the current asset allocation of the PSRS/PEERS portfolio, and reviewed the long-term strategy, portfolio themes, and the broad portfolio expectations. The Systems continue to manage total assets with less risk and more return than other comparable plans over all periods of one year or longer.
Anti-Terrorism Policy - Mr. Husting reviewed the Systems’ Anti-Terrorism and Economic Sanction Investment Policy. The Policy requires PSRS/PEERS staff to provide a report to the Board on an annual basis that identifies any investment actions taken due to links to terrorist or sanction-related activities. Staff submitted a report to the legislature at the end of 2025 to comply with recent statute changes. No action by the Board was needed.
Affirmative Action Policy - Mr. Husting reviewed the Systems’ Affirmative Action Policy and Procurement Action Plan. The Policy requires PSRS/PEERS staff to provide a report to the Board on an annual basis regarding the Systems’ efforts to assure equal opportunities for minorities and women as money managers, brokers, and investment counselors. The Systems are complying with the policy. No action by the Board was needed.
2026 Experience Study Timeline – System staff, including the in-house actuary discussed the timeline for the actuarial experience study 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 Board is scheduled to act on PwC’s recommendations at the June Board Meeting.
Asset Liability Study – This is a formal study conducted every 2-5 years. Staff will work with the consultant, Russell. The discussion covered investment Considerations, such as the Portfolio Approach, Benchmarks, Asset Classes, and Leverage. Staff also discussed Baseline Financial Assumptions, Capital Market Expectations, the Current Portfolio, and the effect of earnings Path.
The staff recommended adopting a formal policy of a 3% asset allocation leverage. The staff also recommended adjustments to the asset allocation. Lastly, the staff recommended maintaining the current 7.3% assumed rate of return. The board approved the staff’s Asset Allocation and Assumed Rate of Return Assumption.
MANAGEMENT REPORT
Set Meeting Dates – The Board voted to change the August 31, 2026, meeting date to September 2, 2026. The Board also approved meeting dates for the second half of fiscal year 2027, including February 8, April 19, and June 8, 2027. The Board has already approved October 26 and December 14, 2026, as meeting dates.
Approval of RFP for Board Election - The Board voted to approve the Request for Proposal (RFP) for the Board election if an election occurs. This allows the PSRS staff committee to recommend the review panel to the Executive Director.
Legislative Update – Mr. Mike Moorefield (PSRS staff) government relations consultant Mr. Doug Nelson presented the February legislative update. Mr. Moorefield and Mr. Nelson gave the Board an overview of the governor's fiscal year 2027 budget recommendations and discussed the DESE budget. The Governor’s budget has a $2.5 billion deficit based on his general revenue forecast. Nelson indicated that the legislature is likely to cut the budget by $900 million to begin to address this ongoing budget shortfall.
Governor Kehoe favors eliminating the personal income tax and has created a task force that will consider rewriting the school funding formula. His budget is nearly $200 million short of full formula funding while also diverting $60 million to the private school voucher program.
The legislative report addressed the investment mandate bills that could impact the Systems.
The report also provided an analysis of the several pieces of legislation that would amend the Systems' statutes. HB 2396 (Bob Bromley) would amend the critical shortage statutes to
effectively eliminate working after retirement limitations. SB 1258 (Maggie Nurrenbern) would create a 2.6% benefit factor for 33 or more years of PSRS service. HB 2095 (Willard Haley) would increase the PSRS lifetime COLA cap in certain years with high inflation. The Systems will provide for an actuarial analysis of these changes to the Systems.
Year in Review (Areas of Impact) - The report reviewed various projects undertaken by the Systems throughout calendar year 2025. The report mentioned key projects and impacts affecting five primary areas: members and employers, staff, investments, Board members, and government relations.
Current CPI-U Update – The Board reviewed CPI-U data. The current fiscal year CPI-U is .46 % through December 31, 2025. Under current policy, when the final CPI-U for a fiscal year is between 2.0% and 5.0%, the Board will make a COLA for eligible retirees of 2.0%. When the CPI-U is between 0.0% and 2.0%, the Board will make a COLA for eligible retirees of 2.0% when the cumulative CPI-U growth reaches or exceeds 2.0%.
Public Comment – There was no public comment.
The public meeting adjourned, and the Board went into closed session.
View past reports at www.mnea.org/psrs.