LAGERS September Board Report

LAGERS September Board Report

The LAGERS Board of Trustees has a fiduciary duty to its membership to ensure the system is administered in a fiscally sound manner. The board meets at least quarterly to make sure LAGERS continues to deliver on its commitments of strength and security.

The board gathered on March 24, 2023 for their quarterly meeting. Below is a summary of the meeting. For more information on LAGERS Board of Trustees or official meeting minutes, please visit our Board of Trustees page.

System Operations Report

The LAGERS Board of Trustees convened for their quarterly board meeting on Friday, September 22, 2023, at the LAGERS Office Building in Jefferson City. The meeting opened with the approval of the consent agenda. Of note, the following new employers have joined the LAGERS system:

  • Putnam County E-911 – July 2023
  • Ripley County Ambulance – July 2023
  • City of Adrian – August 2023
  • Tri-County Health Department – August 2023

Investment Report

LAGERS’ Investment Team reviewed the investment performance and activity from the last quarter, noting there was no significant new investment activity.

The following are the system’s returns for the 1, 3, 5, and 10-year periods, respectively: 4.3%, 10.3%, 7.9%, and 8.5%. The team reminded the board that as long-term investors, the system’s goal is to achieve at or above the system’s 7% investment assumption over the long term.

Investment Policy Statement

As part of the Board’s continuing fulfillment of their fiduciary duty to oversee the investment program of the system, the board reviewed and unanimously approved the system’s Investment Policy Statement. This statement sets the investment objectives and policies of the system and provides the guardrails for the investment team as they implement the system’s investment objectives.

Asset Liability Study

Next, the investment team presented the preliminary results of the system’s Asset Liability Study. To ensure LAGERS continues to set appropriate actuarial assumptions, LAGERS, in conjunction with the system’s actuary and investment consultants, conducts an asset study at least once every five years. This evaluation uses over 5,000 scenarios looking at a range of capital market assumptions and various levels of risk and return. The analysis allows the board to evaluate and set policies driving risk, portfolio allocation, and liquidity. These policies create the guardrails for the investment team and ultimately drive the system’s assumed rate of return.

Following the presentation, the Board discussed a number of questions regarding risk and implementation within the portfolio and ultimately narrowed the portfolio options for investment staff to continue to evaluate.

Click here for more information regarding LAGERS investments.

Actuary Report

LAGERS’ actuarial firm Gabriel, Roeder, Smith & Co. (GRS) presented the results of LAGERS’ 2023 Consolidated Annual Report. The annual report is used to evaluate the financial health of the system and determine employer contribution rates for the coming fiscal year.

GRS reported that the system’s overall funding ratio decreased slightly to 95.1%, noting the decrease was largely due to larger-than-expected pay increases across all employers. Despite the slight decrease, GRS reported that the system continues to be in excellent financial health and that employers can generally expect rate stability in the coming year. The following is the expected impact on employer contribution rates in the coming fiscal years beginning in 2024:

Total Employer Deptaments Evaluated: 1,272

Employers with Rate Decreases: 343

Employers with Rate Increases: 822

Employers with Unchanged Rates: 107

In addition to the overall funding of the system, GRS also provided commentary to the board on the health of the Benefit Reserve Fund. This separate fund is used to pay retiree benefits and Cost of Living Adjustments (COLAs). GRS noted that the fund continues to be fully funded, ensuring the system’s ability to continue paying COLAs and providing additional protection for future adverse experiences, such as investment volatility.

Management Report

Legislative Update

The legislative team presented the results of the Request for Proposals (RFP) process for the system’s Legislative Consultant. The Board unanimously approved staff’s recommendation of renewing their contract with Flotron McIntosh Consulting. Staff reported that the partnership has been successful in previous legislative sessions.

The Board then unanimously approved a new legislative initiative for the 2024 legislative session. The initiative will, in part, seek to modify the Board of Trustees by creating a Retiree Trustee position on the board and expanding eligibility criteria for the Employer Trustee seats.

Approval of Board Election Rules

Staff presented proposed election rules for use in this year’s Board of Trustees Elections, which are scheduled to be held at the LAGERS Annual Meeting in October. Two employer delegate seats will be up for election in 2023. There were no new changes to the rules for this year’s election. The Board approved the rules unanimously.

Click here for more information about this year’s Annual Meeting.

GFOA Award

The finance team reported the system has received the Government Finance Officers Association’s Certificate of Achievement in Financial Reporting for the 45th consecutive year. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting and demonstrates the system’s commitment to full financial transparency.

LAGERS Board of Trustees is a seven-member volunteer board comprised of member and employer representatives. This summary is not the official minutes of the meeting. Visit our website to learn more about LAGERS’ Trustees or to view official minutes.