ERB Update and Highlights: Senate Finance Committee Meeting

The Senate Finance Committee meeting on Wednesday, February 8, 2017, included updates on the ERB, highlighting challenges in the investment environment, ability to hire qualified professionals, long-term sustainability, and investment performance. Key data and recommendations were discussed for the ERB's financial situation.

• ERB Update
• Finance Committee
• Investment Environment
• Long-term Sustainability
• Financial Situation

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Presentation Transcript

1. Senate Finance Committee Wednesday, February 8, 2017 ERB Update Jan Goodwin, Executive Director Mary Lou Cameron, Board Chair H. Russell Goff, Board Vice Chair

2. Pressing Issues Brief update on agency Challenging investment environment Ability to hire and retain qualified investment professionals Long-term sustainability State fiscal situation 2

3. Brief update: ERB Highlights as of June 30, 2016 Active ERB Members Retirees and Beneficiaries Retiree Payroll Member Contributions Employer Contributions Member Contribution Refunds Active Member Payroll Participating Employers ERB Net Assets Average Benefit Average Age at Retirement 60,057 45,797 $973,703,652 $295,946,396 $396,988,557 $39,027,078 $2,612,044,476 218 $11.5 billion $21,972 61.51 3

4. ERBs December 31, 2016 Investment Performance, net of fees 4

5. Total Fund Asset Growth Summary as of December 31, 2016 5

6. Challenging Investment Environment Low return environment Mitigating factors: o Asset diversification o Cost efficient investment strategies 6

7. ERBs Changing Asset Allocation 7

8. Ability to Hire and Retain Investment Staff Continued strong investment performance requires appropriate staffing Our salaries are no longer competitive SB 29 will give more flexibility for investment staff salaries EnnisKnupp Priority Recommendation #19: Seek staffing autonomy to allow the ERB to fill all investment positions without being bound by state personnel office procurement practices. 8

9. Long-term Sustainability Trends are going in the right direction Requires continued diligence by Board Experience studies every two years 9

10. ERB Actuarials at a Glance Fiscal Year 6/30/14 6/30/15 6/30/16 UAAL $6.3B $6.5B $6.6B Funded Ratio 63.1% 63.7% 64.2% Funding Period 42.1 years 43.2 years 44.9 years 10

11. States fiscal situation State fiscal situation threatens education budgets Fewer employees/shorter school year reduces contributions 11

12. ERB Schedule of Contribution Rates % Fiscal Year wage category Date Range Member Rate Employer Rate Employee Pays Total 58-59 7/1/1957 -6/30/1959 3.00% 4.00% 7.00% 42.86% 60-74 7/1/1959 -6/30/1974 4.00% 6.50% 10.50% 38.10% 75-79 7/1/1974 -6/30/1979 5.50% 6.50% 12.00% 45.83% 80-81 7/1/1979 -6/30/1981 6.50% 6.50% 13.00% 50.00% 82-84 7/1/1981 -6/30/1984 6.80% 6.80% 13.60% 50.00% 85-93 7/1/1984 -6/30/1993 7.60% 7.60% 15.20% 50.00% 94-2005 7/1/1993 -6/30/2005 7.60% 8.65% 16.25% 46.77% 2006 7/1/2005 -6/30/2006 7.675% 9.40% 17.075% 44.95% 2007 7/1/2006 -6/30/2007 7.75% 10.15% 17.90% 43.30% 2008 7/1/2007 -6/30/2008 7.825% 10.90% 18.725% 41.79% 2009 7/1/2008 -6/30/2009 7.90% 11.65% 19.55% 40.41% 2010 & 2011 $20k or less 7/1/2009 -6/30/2011 7.90% 12.40% 20.30% 38.92% 2010 & 2011 Over $20K 7/1/2009 -6/30/2011 9.40% 10.90% 20.30% 46.31% 2012 $20k or less 7/1/2011 - 6/30/2012 7.90% 12.40% 20.30% 38.92% 2012 Over $20K 7/1/2011 - 6/30/2012 11.15% 9.15% 20.30% 54.93% 2013 2013 2014 2014 2015 2015 $20k or less Over $20K $20k or less Over $20K $20k or less Over $20K 7/1/2012 - 6/30/2013 7/1/2012 - 6/30/2013 7/1/2013 - 6/30/2014 7/1/2013 - 6/30/2014 7/1/2014 - future 7/1/2014 - future 7.90% 9.40% 7.90% 10.10% 7.90% 10.70% 12.40% 10.90% 13.15% 13.15% 13.90% 13.90% 20.30% 20.30% 21.05% 23.25% 21.80% 24.60% 38.92% 46.31% 37.53% 43.44% 36.24% 43.50% 12

13. Fiscal Year 2016 Retiree Benefits by County $5,728.7 $2,136.1 $14,103.4 $37,787.6 $20,623.6 $6,471.4 $3,714.0 $682.7 $16,311.4 $43,406.9 $21,045.7 $44,918.3 $301,397.5 $3,738.3 $2,531.4 $6,070.1 $28,150.7 $4,625.4 $17,579.6 $987.0 $12,002.8 $13,628.0 $1,318.6 $9,480.9 $25,351.4 $16,208.3 $4,007.6 $16,839.3 $18,637.4 $22,789.5 $103,786.2 $6,099.5 FY16 Payroll: $973,703,652 NM Total: $833,822,467 (County benefits in Thousands $) $1,661.5 13

14. ERB Contact Information: Santa Fe 701 Camino de Los Marquez PO Box 26129 Santa Fe, New Mexico 87502 Phone: (505) 827-8030 Fax: (505) 827-1855 Albuquerque 6201 Uptown Blvd. NE, Suite 204 Albuquerque, NM 87110 Phone: (505) 888-1560 Fax: (505) 830-2976 Toll Free: 1-866-691-2345 Member Help Email: ERB-MemberHelp@state.nm.us Website: www.nmerb.org 14