TRS Board discusses fund's investments, office space

The April meeting of the TRS Board of Trustees was pared down to major topics, and the committees did not meet. In addition to setting rates and benefits for TRS ActiveCare and the state’s three HMOs the board discussed the fund’s investments and changes in long-term office space planning for the agency.

The market value of the fund was reported to be around $150 billion, down from the last official figure of $158 billion at the end of August 2019, and from $164 billion in January 2020. However, the losses have been moderate compared to the plunging of global stock markets, and TRS chief investment officer Jase Aubry attributed this to the wide diversification of the portfolio and a structure that is specifically designed to better weather a volatile economy. He noted that the diversification strategy is working exactly as intended, and Executive Director Brian Guthrie reiterated that members’ annuities are safe and being paid on time.

In light of the vast changes in the economy and workforce issues, TRS has pushed the “pause” button on its office space planning. The agency had not yet signed a new lease on the space on Congress Avenue that currently houses the investment division, and anticipates that it may be able to negotiate lower rates. However, the citywide decrease in demand for space also places in jeopardy the ability to sublease the Indeed Tower office space that had already been leased by TRS, a key component of the revised plan that the Board approved at its February meeting. Guthrie noted that the forced move to working from home, largely successful, has made it likely that returning to a “new normal” will probably include more staffers working remotely. “We’re going back and challenging all of our underlying assumptions,” he said, “but we still think we’ll need a long term solution.”

The Board received a briefing on the staff report released by the Sunset Advisory Commission, which completed its review and analysis of agency operations. Guthrie noted that the agency agreed with the conclusions and recommendations in the report, and had already begun addressing some of them. Recommendations, once finalized by the Commission, will be included in a Sunset bill during the 2021 legislative session. Among the recommendations:

1. Repair the agency’s relationship with its members.
   • Develop a communication and outreach plan to better help members and employers plan for retirement.
   • Make improved efforts to return contributions to inactive members before funds are forfeit.
   • Adopt a member engagement policy to increase transparency on key decisions.
2. Improve contract management and oversight.
3. Provide additional oversight and greater transparency of investment practices.
   • Perform a cost-benefit analysis of implementing an enhanced investment accounting system to provide increased oversight of the custodian bank’s accounting data.
   • Have the Internal Investment Committee review internal investments and strategies.
   • Include clear, easily understandable information about alternative investments in the Comprehensive Annual Financial Report.

Finally, staff reported that TRS trustee Dr. Greg Gibson has resigned from the Board. Gibson holds one of the active member spots on the Board and is retiring, so is no longer eligible for the seat. The election for his replacement will take place along with other trustee elections early next year.