Nathaniel Brengle

The board meeting covered legislative initiatives and updates, including three key initiatives related to the health insurance premium benefit program, the long-term disability program, and membership eligibility waivers, all progressing in the Senate Finance Committee. A significant portion of the meeting focused on investment performance reporting for the third quarter of 2025, noting strong overall fund performance with a return close to 4% for the quarter, and positive year-to-date returns of 10.55%. The investment review highlighted long-term outperformance against the benchmark and peer median, despite shorter-term underperformance on a time-weighted basis. Discussions also covered new asset allocation targets approved in May 2025 and compliance with these targets, along with monitoring volatile market conditions in early 2026 influenced by tariff uncertainty and AI sector jitters. Private markets performance was also reviewed using money-weighted returns.

The board meeting covered several key areas requiring action. Discussions and approvals were held regarding the ASRS 2026 Proposed Legislative and Rulemaking Initiatives, including the 2026 Regulatory Agenda and the 2026 Legislative Agenda. The board recognized the receipt of the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting for the Fiscal Year 2024 Annual Comprehensive Financial Report and the Award for Outstanding Achievement for the 2024 Popular Annual Financial Report. The board accepted the 2025 Actuarial Valuations for the Pension Plan, Health Insurance, Long-Term Disability Program, and the System Valuation, resulting in a contribution rate of 11.87% for the Plan and 0.11% for LTD, effective for the 2027 fiscal year. The recommendation against increasing 13th checks was approved. The board received unmodified opinions from the external auditors on the Fiscal Year 2025 financial statements, including the Annual Comprehensive Financial Report and GASB 68 & 75 Schedules. Updates to the ASRS Board Governance Policy Handbook were approved. Finally, the board moved to executive session to discuss and subsequently approve the reclassification and amendment of the Employment Agreement for the Executive Director.

The meeting commenced with introductions and a quorum confirmation. The primary discussion focused on pension funds, including governance, investment management, trajectory, and the strategic plan of the ASRS. Specific presentations covered pension operations, health insurance, cash flows, contributions, rates of return, investment allocations, and ASRS governance concepts such as board focus and risk management. The current ASRS Strategic Plan was presented, detailing its structure, long-range challenges, and goals concerning investment performance, risk management, and cost-effectiveness. Following public call, the Board recessed to executive session for legal advice regarding fiduciary education and other legal issues, before reconvening and adjourning the meeting.

The meeting agenda included several key discussion points requiring potential action. Discussion items covered the status of the ASRS 2026 Legislative Initiatives, including House Bills HB2089, HB2090, and HB2092, which propose clarifications regarding health insurance premium benefits, long-term disability continuation, and membership eligibility waivers, respectively. The Board received presentations and reports from NEPC on the Investment Program Update, Market Environment Outlook, and Independent Reporting. Further reports covered Risk Analysis and Investment Compliance. The agenda also included announcements regarding Investment Committee membership and upcoming Board Elections, summary of current events, review of supplemental operations reports, and presentation on Board Governance Evaluations. A proposed action item involved discussion and action regarding the Employment Agreement of the Executive Director.

The meeting agenda primarily focused on a detailed presentation and discussion concerning past and current data and perspectives related to pension funds, including the governance, investment management, trajectory, and strategic plan of the Arizona State Retirement System (ASRS). Specific topics covered governance model, approaches to risk, funded status as of June 30, 2025, and contribution rate projections. The agenda also included a session for fiduciary education and legal issues, review of open meeting law and conflict of interest statutes, and a call to the public for open comment.