PSRS - PEERS Board of Trustees Meeting Report (September 2026)

By Otto Fajen, MNEA Director of Legislative Policy

Trustees present: Beth Knes, Chair; Chuck Bryant; Allie Gassman; Dr. Nathan Moore; Amanda Perschall; John Ruth; Katie Webb

SYSTEM OPERATIONS

The Board convened on September 2, 2026. The Board approved the minutes from the June 8-10, 2026, investment symposium and June 15, 2026, meeting and established the order of business.

INVESTMENTS

Investment Performance Report - Craig Husting (PSRS staff) and Michael Hall (Russell) reviewed the Systems' FY 26 investment performance. The Systems' returns for the fiscal year were +12.7% net of all fees and expenses, and added $3.4 billion to the Systems' assets. These returns are better than the assumed annual return of 7.3% and will improve the Systems' funded status. FY '27 returns for the period from July 1st to August 31st are 1.4%.

The Systems have shown 0.49 % of annualized alpha (the excess return over policy benchmarks) over the last ten years, and this excess return has added $4.7 billion in value to the Systems. The Systems' 10-year investment performance remains in the top third relative to other large public plans, while the Systems' remains in the bottom third relative to those plans.

The Systems' investment policy seeks to provide downside protection. This means the Systems experience less of a loss in declining markets. Correspondingly, the policy means the Systems' investments are slower to increase during rising markets.

The report addressed the market and investment environment in FY '26. Public equities remained strong for the fourth year. This year was a time of volatility in the stock market, particularly around the start of the Iran war. The Systems had low implementation performance in FY '26, primarily because of underperforming strong public equities due to the low volatility of the Systems' investment strategy.

Total System assets are $68.6 billion. The investment report provided a broad overview of how the PSRS/PEERS portfolio is structured, including the estimated asset allocation for PSRS/PEERS as of June 30, 2026.

The report covered the investment platform build-out plan, including the investment and operations teams and the St. Louis office space.

MANAGEMENT REPORT

Future Meeting Dates - The Board set meeting dates for September 1, 2027, November 1, 2027, and December 13, 2027.

Member Services Update - Member Services staff shared updated information about membership, retirements, member inquiries, service purchases, working after retirement, website services, member education meetings, and other member services issues.

PSRS active membership is 77,295 and has declined slightly in the last four years, while the number of benefit recipients has increased to 74,135. PEERS active membership has increased to 55,387, while the number of benefit recipients has increased to 41,461. Retirements for 2025-26 totaled 2,796 for PSRS and 2,174 for PEERS.

Key accomplishments - Staff reviewed recent staff work in key areas, including the Benefit Connection podcast, electronic tax document options, rollover processing, internal staff payroll systems, WAR dashboard, CEM Benchmarking recognition, GFOA Certificate of Achievement award for the ACFR for the 32nd consecutive year, completion of the experience study, PSRS summer interns, St. Louis office expansion, and welcoming new board member John Rush.

Member Services Benchmarking - The system hires CEM Benchmarking to review PSRS/PEERS member services and compare them both to the entire plan universe of CEM clients and comparable public pension plans. CEM reported that PSRS/PEERS again has the second-highest-rated services in our public plan peer group. Meanwhile, PSRS/PEERS member service costs are slightly below median for the peer group. This evaluation gives the Board outside confirmation that the Systems provide a broad range of outstanding member services efficiently.

RFP for Fiduciary Legal Counsel - The Board approved the Staff recommendation to appoint IceMiller as fiduciary legal counsel. The Staff issued an RFP in July 2026 and had ten respondents to the RFP. The Staff selected IceMiller as the best option among the respondents. IceMiller represents public pension plans in 43 states. The legal contacts from IceMiller for the Systems will be Audra Ferguson and Nicole Giambarrese.

Government Relations Update- Mike Moorefield gave the legislative report. Amendments 4 and 5 were resoundingly defeated in the August primary election. Ballot language changes made a difference as did combined message. Senate candidates found Amendment 5 to be a campaign liability. Data centers also became a key issue. Curtis Trent lost, suffering an unusual primary defeat. Senate leadership races will be affected by these primary results along with the highly contested general election results in Senate districts 8 and 30.

The legislature is deficit spending in the FY '27 budget by using one-time funds and will face at least a $1.7 billion structural deficit in FY '28. Out of the current $16.1 billion in spending under the General Revenue budget, only $7.1 billion is considered "discretionary," and this includes K-12 and higher education spending. DESE's funding request for FY '28 is $400 million, including $100 million to replace one-time funds in the formula, $110 million in new obligations, and $200 million in underfunding for the current fiscal year.

The report also mentioned other likely issues to be considered in the upcoming session, including property tax changes, redistricting, the upcoming school formula Task Force recommendations, and difficult budget decisions.

CPI update/COLA review - The Board reviewed the COLA policy and COLA history for the current fiscal year. The final FY '25 CPI-U was +3.53 % through June 30, 2026. Under law and current policy, the Board is expected to approve a 2.0% COLA for eligible retirees beginning in January 2027.

Public Comment - None.

The public meeting adjourned, and the Board went into closed session.

Read past reports at www.mnea.org/psrs.