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HOU LAB SB2765, SD1 ERS Investment Personnel

The House Committee on Labor & Public Employment

March 20, 2018

10:00 AM, Conference Room 309

RE: SB 2765 SD 1, Relating to Investment Personnel of the Employeesʻ Retirement System

Attention: Chair Aaron Johanson, Vice Chair Daniel Holt and members of the Committee

The University of Hawaii Professional Assembly (UHPA) urges the committee to support passage of SB 2765 SD 1.

In January, UHPA had the opportunity to meet with the ERS Actuarial Consultant, Gabriel, Roeder, Smith & Company (GRS), to go over the most recent actuarial valuation report.  We confirmed with GRS that having a robust and functional investment team provides the appropriate resources to support the funding needs of the current and future liabilities.  A robust investment team will ensure that the investment returns are maximized when the financial markets are performing well, and will help protect against investment losses when the financial markets are struggling.    

The amendment to the measure places the responsibility of hiring investment personnel and investment professionals with the Board of Trustees, rather than the executive director, which is in alignment with other agencies such as the Hawaii Employer-Union Trust Fund (EUTF).    

The investment team performed exceptionally well over the past seven years under the previous Chief Investment Officer, helping to stabilize the financial situation and decrease the timeline to full funding.

With a variety of issues arising over the funding of the ERS it is important that the ERS Board be fully responsible for decisions of investment related matters. Both elected and appointed Board members owe a duty to the beneficiaries of the fund to ensure proper care is taken with the funding of the system.

UHPA supports the passage of SB 2765 SD 1.

Respectfully submitted,

Kristeen Hanselman

Executive Director