December 15, 2025
By Otto Fajen
Trustees present:
Beth Knes, Chair
Dr. D. Eric Park, Vice Chair
Chuck Bryant
Allie Gassman
Dr. Nate Moore
Amanda Perschall
Katie Webb
BUDGET AND AUDIT COMMITTEE MEETING
Annual Comprehensive Financial Report - Prior to the meeting of the Board of Trustees, the Budget and Audit Committee met to review the June 30, 2025, Audit Report. Representatives of Williams-Keepers (WK) presented their audit of the Systems’ Annual Comprehensive Financial Report (ACFR) for last fiscal year. The audit reviews the Systems’ internal controls, contributions received, investment activities, payments to retirees, and member data. The committee voted to approve the audit report.
SYSTEM OPERATIONS
The Board met on December 15, 2025. The board approved the minutes from the November 3, 2025, meeting. Board Chair Knes announced that the Systems received the Pensions and Investments 2025 award for being one of the “best places to work in money management.”
INVESTMENTS
Investment Performance Report – Craig Husting of PSRS/PEERS and Michael Hall from Russell Investments gave the investment report and reviewed ongoing investment activities. The investment report updated the quarter ending on September 30, 2024. The Systems’ investments continue to earn good absolute and relative returns over longer time periods. As of September 30, 2025, the one-year returns were 10.61% and fiscal year-to-date returns were 3.6%. Updated returns as of November 30, 2025, show calendar year returns of 12.6% and fiscal year-to-date returns of 5.3%.
About 75% of the growth in U.S. equities over the last three years are attributed to AI-related companies. The Systems’ returns are below benchmarks, primarily due to high growth in U.S. equities during these time periods. The Systems’ investment approach minimizes downside risk and tends to lag public equity markets during high growth periods. The Systems continue to have more return and less risk than their peer systems.
The Board reviewed the current asset allocation of the Systems’ portfolio.
Global Investment Performance Standards (GIPS) – GIPS standards are voluntary ethical standards for calculating and presenting investment performance based on the principles of fair representation and full disclosure. GIPS are created by the CFA Institute, a not-for-profit association of investment professionals, as standards for investment managers. CFA Institute expanded the GIPS in 2020 with provisions designed for pension funds. The Systems have complied with GIPS standards for the last four fiscal years. Currently, PSRS/PEERS is the only pension system in Missouri that complies with GIPS.
Investment Beliefs – The Staff presented a report of conversations with a total of twenty individuals, including both Board members and staff. The report detailed top themes from Board members and from staff. Board members’ beliefs focused on governance and trust in staff, while staff beliefs related to implementation. The report recommends also including a focus on the importance of path, which refers to the cumulative impact over time of returns obtained earlier within a period of time. The report also recommends recognizing that the reduction in total plan volatility from diversification of asset classes (both public and private), strategies and managers benefits the Systems. The Board approved the recommended changes to the Systems’ Investment Beliefs.
Public Equity – PSRS Staff reviewed the Public Equity Portfolio, including both U.S. Equity and Non-U.S. Equity. PSRS emphasizes risk management and downside protection. The U.S. Equity market is very efficient, so it is difficult for active management to generate excess returns, while non-U.S. markets tend to be less efficient and provide opportunities for active management. The Public Equity Portfolio is currently overweight to U.S. equities given relative macroeconomic strength and overweight to Global Equity within the Non-U.S. Program. The Public Equity Portfolio is currently underweight in developed Europe, neutral to emerging markets, and overweight to U.S. Small-Cap based on attractive valuation. The Portfolio continues to emphasize downside protection using low volatility equity strategies.
Real Estate Portfolio Review – System staff and Townsend representatives presented a report on the Real Estate portfolio. The Real Estate Portfolio provides income across market cycles and balances against the volatility of equities. Real estate transaction volume for the portfolio in 2025 is down due to lower supply and higher interest rates. Current market trends include an acute housing shortage, e-commerce growth that requires investment in logistics infrastructure, continuing growth in digitization and AI, demographic trends toward aging populations, and institutionalization of alternative sectors.
The portfolio is overweight in preferred asset classes, including industrial and alternative properties, with less investment in office space and apartments. Going forward, the portfolio will maintain infrastructure investments and target opportunities in alternative sectors such as residential, digital infrastructure, and global supply chain.
ACCOUNTING
Independent Auditor’s Report - The Board reviewed the FY 2025 Annual Comprehensive Financial Report (ACFR). Missouri law requires pension plans to create an ACFR report, but the Systems’ ACFR goes beyond the minimum requirements. The ACFR serves to document the activity conducted by the Systems and ensure transparency and accountability to members. The financial section includes an unmodified or “clean” independent auditor’s opinion, indicating that the financial statements may be relied upon by all stakeholders.
The FY 2025 Annual Comprehensive Financial Report (ACFR) can be viewed at the following webpage:
https://www.psrs-peers.org/PSRS/Resources/Publications
Williams-Keepers provided the independent auditor’s presentation to the Board. The Board reviewed and approved the June 30, 2025, Audit Report referred by the Budget and Audit Committee.
MANAGEMENT REPORT
Audit Committee for Election Petition Certification - The Board approved the Audit Committee for Election Petition Certification and delegated organization of the committee to Executive Director Dearld Snider. The terms for MNEA members Amanda Pershall and Allie Gassman as Trustee will both expire on June 30, 2026, and the election process will begin in January 2026. The Audit Committee will meet in March 2026 to review the collected signatures for election to the Board of Trustees.
Board Schedule – The Board approved a motion to change the June 8, 2026, meeting date to June 15, 2026.
LEAD Group Recognition – The Board recognized the new class of the Systems’ leadership group known as LEAD.
Legislative Report – Staff presented the legislative report. The report reviewed the pre-filed bills, noting the return of several retirement issues, including retirement system fiduciary duties and investment mandates. After years of budget increases, the legislature faces a worsening budget situation. Declining state revenues combined with required increases in education and health care expenses mean the legislature is facing budget cuts of approximately $900 million for next year’s budget and possibly another $1 billion in cuts for the following year. Meanwhile, there are discussions of limitations on local property taxes and elimination of the state individual income tax.
There are two priority bills regarding investment mandates and system governance. HB 1668 (Brian Seitz) mandates “foreign adversary” divestment and would be cumbersome and harmful to the Systems’ investment process. SB 1302 (Mike Moon) prohibits giving preferential treatment or discrimination based upon ESG scores.
There are several priority bills regarding pension benefits including. SB 1258 (Maggie Nurrenbern) would create a 2.6% multiplier for 33+ years of service. Actuarial analysis of previous versions of this bill show that it does not increase System cost. HB 2144 (Bob Bromley) doubles the $5,000 lump sum death benefit for PSRS. Also, HB 2095 (Willard Haley) would increase the payment to retirees subject to lifetime COLA cap by 2% when System earnings are more than 2% over the assumed rate of return. The Systems will do an analysis to estimate how much this proposal would increase System costs.
Key Accomplishments – Staff gave a brief report on recent staff and Board activities and recognitions, including: the Best Places to Work Award, the 2025 LEAD Class, migration of Sitefinity webservices to Microsoft Azure cloud, migration of files to Oracle Fusion, implementation of talent management module in Oracle Fusion, the PPCC Standards Award, renewal of custodial and operational banking Contracts, and implementation of remote deposit automation.
Current CPI-U Update – The Board reviewed CPI-U data. The current fiscal year CPI-U is 0.69% through September 30, 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 – No public comment was offered.
The public meeting adjourned, and the Board went into closed session.