By Otto Fajen
MNEA Director of Legislative Policy
Trustees present
Beth Knes, Chair
Dr. D. Eric Park, Vice Chair
Chuck Bryant
Allie Gassman
Amanda Perschall
Katie Webb
SYSTEM OPERATIONS
The Board convened on November 3, 2025. The Board approved the minutes of the August 25, 2025, meeting and established the order of business.
INVESTMENTS
Investment Performance Report – Craig Husting and Michael Hall from PSRS staff reviewed the Systems’ unofficial returns for the quarter ending September 30, 2025. The Systems’ returns for the quarter were +3.6% net of all fees and expenses. Returns for the calendar year 2025 through September 30 were 10.8% net of all fees and expenses.
The Systems have shown an annualized alpha of 1.4% (the excess return over policy benchmarks) over the last five years. The Systems’ 5- and 10-year investment performance remains in the top quartile relative to other large public plans. The first quarter (official) performance will be reported in December.
The report addressed the recent market and investment environment. Current issues include lowered interest rates, continuing inflation, the government shutdown, and all-time highs in public equities. Strong earnings in public equity allowed the Systems to reduce that portion of the portfolio by $795 million last quarter.
The Systems’ investment policy seeks to provide downside protection. This means the Systems’ experience less of a loss in declining markets. Correspondingly, the policy means the Systems’ investments are slower to increase during rising markets.
Total System assets are $64.4 billion. The investment report provided a broad overview of how the PSRS/PEERS’ portfolio is structured, including estimated asset allocation for PSRS/PEERS.
Private Equity – Pathway Capital Management staff gave an overview of the Systems’ Private Equity and Private Credit performance. The Systems’ Private Equity portfolio continues to achieve high earnings since the program’s inception in 2003. The Systems have contributed $12.5 billion since inception, and the portfolio has a market value of $21.3 billion. This represents an annual return of 13.3%, which is 3.9% higher than the private equity benchmark. The overview included a discussion of the Systems’ co-investment and direct credit portions of the portfolio.
Private Credit - Since its inception, the Private Credit portfolio has received $2.7 billion in commitments and has distributed $1.5 billion. Since its inception, the Private Credit portfolio has sustained a net rate of return of 10.1%. The portfolio takes advantage of the Systems’ longstanding relationships with leading private equity and private credit firms to create high-quality direct credit opportunities. The Systems pay little to no management fees or carried interest, resulting in savings of $152 million.
REPORT OF ACTUARY
June 30, 2025, Valuation - Representatives from PricewaterhouseCoopers (PwC) presented the results of the June 30, 2025, actuarial valuations for the Systems. The System’s asset returns were 10.7% for the fiscal year. The June 30, 2025, preliminary pre-funded status based on the actuarial value of assets of PSRS was 89.1% and PEERS was 89.9%.
The valuation indicates that the Actuarially Determined Contribution (ADC) rates are now just below the current contribution rates at 27.13% for PSRS and 12.93% for PEERS. If future assumptions are met, the unfunded liability is expected to be eliminated in approximately 12 years. The Systems will conduct a new experience study in 2026 to revise assumptions that affect the status of the Systems. PwC mentioned the risks and considerations of asset returns below the assumed 7.3%, uncertainty about inflation, and increases in long-term inflation. The contribution rate is sensitive to investment returns, COLA changes, and experience.
The funded status of both Systems is viewed to be healthy. Based on PwC’s recommendation, the Systems are now assuming a 7.3% expected return on assets. PwC analyzed the impact of new legislation, including the extension of changes to the Working After Retirement limitations through 2030. This extension will have minimal effect on the Systems.
PwC recommendations: 1) that the Systems maintain the current total contribution rates at 29% for PSRS and 13.72% for PEERS, and 2) that the Systems grant a 2% COLA in January 2026, per the existing COLA policy. The Board approved both maintaining the current contribution rates and implementing a 2% COLA in January 2026.
MANAGEMENT REPORT
Board Election Schedule: The Board approved the election schedule for both Allie Gassman and Amanda Perschall. Allie Gassman’s three-year term will expire on June 30, 2026. Amanda Perschall is serving the remainder of a three-year term that also expires on June 30, 2026.
Petition forms will be available on January 5, 2026, and nominating petitions must be postmarked by February 18, 2026. A committee will audit and certify nominating petitions during the week of March 2, 2026. If an election is required, ballots will be mailed on April 23, 2026, and must be returned with a postmark no later than May 22, 2026. If enough verified petitions are returned for only a single candidate by the February 18 deadline, the nominated candidate will be elected as Trustee without sending ballots to System members.
Key Accomplishments – Staff reviewed recent work in key areas.
CPI update/COLA review – The Board reviewed the COLA policy and COLA history for the current fiscal year. The FY 25 CPI-U was up 0.69% through September 30, 2025. If the CPI-U increases by 2.00% for the entire fiscal year, the Board is expected to authorize a 2.0% COLA for eligible retirees beginning in January 2027.
Public Comment – None.
The public meeting adjourned, and the Board went into closed session.
Find past reports at mnea.org/psrs.