Trustees present:
Beth Knes, Chair
Dr. D. Eric Park, Vice Chair
Chuck Bryant
Allie Gassman
Amanda Perschall
Katie Webb
BUDGET AND AUDIT COMMITTEE MEETING
Prior to the meeting of the Board of Trustees, the Budget and Audit Committee met at 8:00 a.m. The Systems issued an RFP this spring to assess banking vendors and ensure it retains the best overall service. The Committee recommended retaining Central Bank as the Systems’ banking service. The Committee also recommended the Annual Banking Resolution that allows the administrators of the Systems to work with Central Bank without requiring further Board action on the details of each action.
The staff presented the FY 2026 budget proposal, and the Committee approved the budget for recommendation to the Board. The largest part of the budget is the payment of member benefits. The budget also includes investment fees and expenses, and administrative expenses. Investment expenses are increasing as the Systems make more private equity investments. The Board reviewed the various expense categories within the broad categories of personnel, professional services, and operations.
The total budget request has increased by 4.8% from the fiscal year 2024-2025 budget. An expected 4.8% increase in benefit payments to members is driving the increase, which includes a projected January 1, 2026, cost-of-living adjustment (COLA), the 2% COLA granted on January 1, 2025, and the addition of benefits for new retirees. The Systems' actuary will present the recommended January 1, 2026, COLA at the October 2025 Board of Trustees meeting.
SYSTEM OPERATIONS
The Board approved the minutes of the April 7, 2025, meeting and established the order of business.
INVESTMENTS
Investment Performance Report - Craig Husting from PSRS/PEERS and Michael Hall from Russell reviewed the March 31, 2025, investment results and estimated investment performance through May 31, 2025. The Systems’ estimated fiscal year return for FY 2025 through May 31, 2025, was 8.0%. Craig Husting reviewed the investment market conditions and the Systems’ asset allocation.
Custodial Review and Contract – Staff reported that the Systems hired RVK in February 2025 to conduct a custodial and related services review. The Systems are currently using JP Morgan for custodial services. The current contract will expire in September 2025. Based on the results of the review, the Board voted to authorize staff to work with RVK to negotiate new contract terms for custodial services with JP Morgan for a contract through September 2030.
Real Estate Portfolio – Staff provided the annual review of the Real Estate Portfolio. Real Estate is part of the Private Credit Portfolio. The role of Real Estate in the PSRS/PEERS portfolio is to provide a stable income stream, capture property appreciation, serve as a hedge against inflation, and provide diversification in the portfolio. The 10-year annualized return for the Systems’ Real Estate Portfolio through March 31, 2025, was 7.1%.
MANAGEMENT REPORT
Meeting Dates – The Board approved its meeting dates for calendar year 2026:
February 2, 2026
April 20, 2026
June 8, 2026
August 31, 2026
October 26, 2026
December 14, 2026
Operating Band Review and Contract – The Board approved the budget committee’s recommendation to retain Central Trust Bank as the bank for the Systems’ banking, treasury, and cash management services.
Banking Resolution – The Board approved the Annual Banking Resolution that allows the administrators of the Systems to work with Central Trust Bank to make needed changes to their banking relationship without requiring further Board action of the details of each action.
Budget – The Board approved the Systems’ FY 2026 budget as recommended by Staff and approved by the Budget and Audit Committee. The largest part of the budget is the payment of member benefits. The budget also includes investment fees and expenses, and administrative expenses.
Implementation of Regulations – The Board approved a motion to file proposed regulatory changes as proposed by staff to clarify current language and processes.
Legislative Report – Mike Moorefield gave the legislative report. The Systems tracked seventy bills, filed 128 fiscal note requests, and tracked thirty-two priority bills. The legislature passed sixteen appropriations bills and fifty-one policy bills and joint resolutions. Four bills contained the Systems’ legislative package. These bills contained provisions regarding investment mandates and system governance that are consistent with the Systems’ current policies. These bills also extend the waiver for PSRS retirees to work after retirement as a substitute teacher for more than the normal 550-hour limit.
No bills passed that would negatively affect the Systems.
The Governor has until July 14th to sign bills. The normal effective date for bills is August 28.
CPI update/COLA review – The Board reviewed the COLA policy and COLA history for the current fiscal year. The current CPI-U is up 2.1% through April 30, 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%. At this point, it appears likely that eligible retirees will receive a 2.0% COLA in January 2026.
Public Comment – None.
The public meeting adjourned, and the Board went into closed session.