North Carolina Department of State Treasurer

The meeting focused heavily on the consent agenda items, which included multiple municipal finance matters from entities such as the Town of Dunn and the City of Kernersville. Discussion on the Town of Dunn's financing revealed that property sales proceeds would be allocated to reimburse the water and sewer fund or support debt service, depending on whether the underlying parcels were financed. For the Town of Kernersville, the commission discussed the inclusion of both a general contingency and a construction allowance for projects, which staff explained was necessary due to project timelines related to the ACC tournament. Additionally, the commission reviewed Attachment B, concerning an $8.4 million state revolving loan for a joint intake and interconnect upgrade project for the Town of Wilsboro and North Wilsboro. Staff detailed Wilsboro's prior financial difficulties, including low general fund reserves and budget ordinance violations, while noting recent improvements, such as addressing an illegal investment and receiving the loan for this vital water/sewer project needed for economic development, including supporting Tyson Foods' expansion.

The meeting commenced with administrative items concerning public comments and noted the recording of the session. A key highlight shared was the plan exceeding $20 billion in assets for the first time. Discussions covered the consent agenda, which included approving the minutes from the December 4, 2025 meeting and updates to governance policies. Administrative matters focused on extending the fee holiday for another 12-month period and proposing the plans cover one quarter's worth of recordkeeping fees for all participants, totaling approximately $2.25 million, to further reduce fee reserves. Legal matters addressed relaxing uniformity requirements for employer contributions, specifically allowing special contributions for part-time law enforcement officers, firefighters/rescue squad workers, and grouping employees by job classification, skills, or duties. Additionally, amendments were proposed to incorporate Roth catchup contributions as required by Secure 2.0 regulations for highly compensated employees. The meeting concluded with a presentation by the auditing firm regarding the methodology for the upcoming financial statement and employer audits, focusing on risk assessment, internal controls, and substantive testing of investments, contributions, distributions, and administrative expenses.

The meeting convened to discuss the refinancing of Endeavor Charter School's outstanding debt, totaling $15.25 million in conduit revenue bonds, utilizing a synthetic fixed rate through a swap mechanism. Significant discussion focused on the debt structure, where the foundation is involved via a guarantee and holds the real estate, though only the school can legally be the borrower. The agency also discussed proposed updates to financing guidelines for fixed-rate debt transactions, specifically concerning entities rated Double B category or better, requiring extensive ongoing reporting, third-party feasibility studies, and institutional buyer transactions with minimum denominations of $100,000. Enrollment and waitlist figures for Endeavor Charter School were also reviewed, showing the school is at full capacity with a substantial waitlist.

The meeting commenced with administrative matters, noting that the session was recorded and would be posted online, followed by roll call attendance and a declaration regarding conflicts of interest. Key discussions centered on the Asset Liability Study, with introductory remarks highlighting the tradeoffs facing decisions around investment policy setting and strategic asset allocation. The presentation focused on managing risk profiles, including volatility and drawdown risk, within an asset liability framework, analyzing impacts on funded ratios and potential contribution rates. The board was asked to confirm alignment with the desired risk appetite, expressed as an absolute risk operating range. Modeling details were presented, including comparisons against current strategic asset allocation, a December 2024 portfolio, peer groups (based on size, member-to-beneficiary ratio, benefit payout ratio, and funded ratio), and two model portfolios (MP1 similar volatility to peers, MP2 lower volatility). The discussion also covered the statutory illiquidity cap of 40% and the approach to defining and scoring illiquidity in asset classes. The modeling, conducted by Ortech with support from Gallagher, utilized arithmetic means for expected returns and volatility estimates.

The meeting, noted as a continuation of the January session, involved calling the roll, confirming a quorum, and stating that the proceedings were being recorded publicly. Key discussions focused on the minutes of the January 6, 2026 meeting, where specific amendments regarding financial advisor approval and interest rate/term descriptions were debated, leading to tabling the minutes' adoption. The agenda then proceeded to cover an overview of the Agency's creation in 1986, its purpose to provide tax-exempt capital financing for educational and other public-purpose entities, and the cumulative financing volume provided ($9.68 billion since inception). Further presentation covered the criteria for financial responsibility, project feasibility, and public service availability required for approval. The role of the Agency as a conduit issuer for tax-exempt debt was clarified, emphasizing that the state's credit is not pledged.