Josh Garcia

The Audit Committee meeting agenda included several key reports and an action item. Reports covered employer audits, delinquent/late filing employers, and a compliance update, including monitoring results for various investment pools and funds, and analysis of overdraft charges. The primary action item was the recommendation to repeal Resolution 2012-32, which mandated divestment from companies with material business in Iran, based on the argument that federal sanctions already prohibit such transactions and the resolution imposes an unnecessary administrative burden. The committee also reviewed future meeting schedules and discussed the committee charter and self-assessment.

The primary focus of the meeting involved a substantial discussion regarding the preliminary 2021 Valuation Results for the PERS and TRS, which indicated strong investment performance (approximately 30% market return for FY21) and favorable liability experience, leading to higher funded ratios and lower projected contribution rates. A key debate centered on the administration's proposal to reset the actuarial asset value to the market value to avoid potential future overfunding, counterbalanced by concerns from committee members about the risk of losing smoothed investment gains and the implications of the Metcalfe decision regarding healthcare benefits. The committee ultimately tabled the resolutions related to this reset for further research and discussion at a subsequent meeting. Additionally, the committee addressed FY2023 contribution rates for DC retirement plans, unanimously approving the Retiree Major Medical Insurance and Occupational Death & Disability Benefit rates for PERS and TRS. A motion regarding the NGNMRS annual contribution failed due to the plan being significantly overfunded (191 percent). Discussions also occurred regarding the timeline for the 2021 experience study economic assumptions, a review of online actuarial dashboards, the status of the independent audit of the State's actuary, and a periodic self-assessment of the committee's effectiveness.

The Actuarial Committee meeting focused on reviewing the 2017 experience study performed by Buck, with commentary provided by Gabriel Roeder Smith (GRS). Key discussions centered on actuarial assumptions, including demographic assumptions, healthcare cost trend rates, and economic assumptions like inflation and investment return rates. The committee reviewed proposed changes, such as lowering the inflation assumption to 2.5% and maintaining the real return assumption near 4.88%, leading to a combined investment return assumption of 7.38%. The potential repeal risk of EGWP subsidies was noted for disclosure in the valuation report. The committee also reviewed attachment materials detailing healthcare trend rates, UAAL amortization methods, and projected contribution rates under various scenarios. A significant portion of the meeting was dedicated to a legal review regarding liability layering, with discussion on whether to adopt a 25-year layered amortization period based on statutory interpretation. Action on the resolution accepting the experience study assumptions was tabled until January 2019 to allow new Trustees to review the materials.

The meeting focused on reviewing and discussing amendments to the supplemental report to the legislature. Key discussions involved suggested revisions to language regarding annual interest crediting, the responsibility for hearing appeals, actuarial calculations, and proposed state contributions to manage increasing PERS costs. The board also addressed concerns about past actions, such as early retirement incentive programs, which impacted the unfunded liability, with clarification provided on administrative steps taken to correct such practices. Subsequently, the board took action to adopt amendments to the supplemental report and passed a resolution authorizing an administrative rule for establishing group trusts within the Alaska Supplemental Annuity Plan and new Defined Contribution retirement plans to facilitate pooled investment. Other matters included inquiries about unanswered questions sent to the Attorney General's Office and the status of the retirement calculator on the Division of Retirement and Benefits website.

The committee meeting focused on the review of draft June 30, 2017 financial statements for several retirement systems, including PERS, TRS, JRS, SBS, and the Deferred Compensation Plan. Discussion addressed questions regarding the net OPEB liability amounts in the PERS and TRS statements and the presentation format. Significant time was dedicated to the implementation of GASB 74, specifically the required additional disclosures for health plans, and confirmation that KPMG was vetting the language. Furthermore, the committee discussed the UNAUDITED status of the National Guard and Naval Militia Retirement System (NGNMRS) financial statements due to unconfirmed census information, noting the need for a project with the Department of Military and Veterans Affairs to resolve the manual data collection issues. The materiality of the NGNMRS to the State's CAFR was reviewed. Other topics included clarifications on "due to/from the General Fund" entries related to timing of expense payments and the statutory basis for forfeitures due to unvested employees. The committee also scheduled the next regular meeting for December 6, 2017.