Joint Committee Committee on Joint Finance (12/12/2013)

Final
STAFF SUMMARY OF MEETING

COMMITTEE ON JOINT FINANCE

Date:	12/12/2013	ATTENDANCE

Time:	03:05 PM to 04:27 PM	Becker	X
		DelGrosso	E
Place:	HCR 0107	Foote	X
		Grantham	X
This Meeting was called to order by		Hill	E
	Representative Court	Joshi	X
		Kagan	X
This Report was prepared by		Kerr	E
	Kori Donaldson	Labuda	X
		Melton	X
		Pabon	X
		Priola	X
		Saine	X
		Swalm	*
		Ulibarri	X
		Wilson	X
		Johnston	X
		Court	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SMART Act Overview PERA SMART Act Hearing		Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only

03:05 PM -- SMART Act Overview

Mr. Erick Scheminske, Deputy Director, Governor's Office of State Planning and Budgeting (OSPB), discussed changes to the State Measurements for Accountable, Responsive, and Transparent (SMART) Government Act pursuant to House Bill 13-1299 and the benefits of the performance management system. Mr. Scheminske distributed a handout, "OSPB Perspectives on SMART Act Hearings" (Attachment A). He explained that agencies will engage in developing very detailed performance plans prior to the 2015 legislative session and described the topics that will be addressed by state departments and agencies during the 2014 SMART Act hearings. Mr. Scheminske also clarified the number and role of liaisons to be appointed from the Joint Finance Committee to the various departments and agencies that it oversees.

13JTFinance1212AttachA.pdf

03:14 PM

Mr. Scheminske responded to a question from the committee about what is meant when an agency "partially agrees" to implement a recommendation contained in a state audit. Discussion ensued on this topic. The chair walked the committee through various materials provided to the committee, including the meeting agenda and travel reimbursement forms.

03:18 PM -- PERA SMART Act Hearing

Mr. Greg Smith, Executive Director, and Ms. Jennifer Paquette, Chief Investment Officer, both representing the Public Employees Retirement Association (PERA) presented information about the operation of PERA, its recent performance, and its legislative agenda for the upcoming 2014 legislative session. Mr. Smith distributed the 2012 PERA Comprehensive Annual Financial Report and a report on the actuarial valuation of PERA. These reports are on file with Legislative Council Staff. Committee members also received a handout detailing Mr. Smith's presentation (Attachment B). Mr. Smith began by summarizing the retirement plans and benefits offered by PERA. He next spoke about rule making undertaken by PERA in response to market and legislative changes.

13JTFinance1212AttachB.pdf

03:27 PM

Mr. Smith discussed membership in PERA, including the number of active and retired members. He next spoke to page 6 in Attachment B and the contributions to, investments earned, and benefits paid by PERA. Mr. Smith continued his presentation with an overview of assets and distributions made by PERA over a 25-year period (see page 7 in Attachment B). Mr. Smith responded to questions about audit recommendations not fully implemented and the PERA board decision to reduce the estimated rate of return on investments from 8 to 7.5 percent.

03:39 PM

Mr. Smith continued to address questions from the committee, including questions about several pending court cases involving PERA. Mr. Smith next answered a question about the amount of contributions made to PERA by local school districts on behalf of their employees. Discussion ensued on this topic.

03:48 PM

Discussion turned to the recent change in the estimated rate of return on PERA investments and the impact of Senate Bill 10-001 on eliminating or reducing PERA's unfunded liability. Mr. Smith responded to questions about when PERA expects to eliminate its unfunded liability and whether PERA can calculate the potential impact of future economic downturns or other negative market conditions. In response to a question, Mr. Smith discussed the difference in how the PERA board and other entities forecast the rate of return on investments. He referenced pages 14 to 16 in Attachment B.

04:05 PM

Discussion continued on the calculated rate of return on investments and how the PERA board decides what percent calculation to use. Mr. Smith answered a question about a table showing the comparative rate of return between various public pension plans (see page 15 of Attachment B). Ms. Paquette continued the presentation beginning on page 9 of Attachment B. She responded to a question about how long PERA has invested in private equities. She also discussed the length of maturities for various types of investments. Ms. Paquette concluded her presentation with a discussion of the estimated year-to-date investment returns for calendar year 2013 and the audited results for calendar year 2012.

04:16 PM

Discussion returned to the topic of how various pension plans calculate the estimated rate of return on their investments. Mr. Smith spoke about the authority of the PERA board and about page 18 of Attachment B. He addressed a question about the performance of the Denver Public Schools division after its merger with PERA.

04:27 PM

The committee adjourned.