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SB 2765 ERS Relating to Investment Personnel

The Senate Committee on Labor

Tuesday, January 30, 2018

2:45 PM, Conference Room 229

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

Attention: Chair Jill Tokua, Vice Chair J. Kalani English and members of the Committee

The University of Hawaii Professional Assembly (UHPA) urges the committee to support passage of SB 2765, with amendments.  UHPA does support allowing the Board to expand its authority to appoint investment professionals reporting to the chief investment officer that are exempt from Chapters 76 and 89.

However, UHPA recommends an amendment to SB 2765 which amends Chapter 88-29.5 by removing “..through the executive director…” from line 4 of page 1 of the bill.  The Board should be making these decisions with insight from the the subject matter expert, the chief investment officer, not the executive director.

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.  Expanding the ERS investment team provides the appropriate resources to ensure that the investment returns are maximized when the financial markets are performing well, and helps protect against investment losses when the financial markets are struggling.  

The investment team has performed exceptionally well over the past seven years helping stabilize the financial situation and decrease the timeline to full funding, despite actions by the Board that have dramatically increased the unfunded liability forcing a dramatic increase in employer contributions over the next three years.  

UHPA supports the passage of SB 2765 with amendments.

Respectfully submitted,

Kristeen Hanselman

Executive Director