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GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM OF THE VIRGIN ISLANDS REGULAR MEETING OF THE BOARD OF TRUSTEES St. Thomas/St. Croix via Zoom Thursday, February 23, 2023 9:30 am ** AGENDA ** I. Call to Order II. Roll Call III. Comments and Suggestions from Retirees IV. Comments and Suggestions from Active Members V. Secretary’s Minutes (Regular: 1/26/23) VI. Communications and Correspondences VII. Chairperson’s Report VIII. Administrator’s Report IX. Committee Reports X. Treasurer’s Report XI. Investment Officer’s Report XII. REGULAR SESSION A. New Business (i). Approval of Petty Cash Fund for Havensight Mall B. Unfinished Business (i). Administrator Search XIII. EXECUTIVE SESSION This portion of the meeting will be closed to the public for matters pertaining to trade secrets / or financial or commercial information/ or personal/ or legal matters; or matters whose premature disclosure will frustrate the implementation of the proposed agency action. A. New Business (i). Legal Matters XIV. Privileges of the Floor XV. Adjournment GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 1 The Regular Meeting of the Board of Trustees for January 26, 2023, was called to order at 9:33am. The meeting was held via Zoom. At roll call, Trustees present were Bowry, Dorsey, Russell, Smith, and Chairman Callwood. Trustees not present were McDonald, and Ex-Officio Richardson. Trustee Liger arrived late. A quorum was established with 5 voting trustees present, 1 absent (McDonald) and one late (Liger). Ex-Officio member Cindy Richardson also arrived late. Trustee Liger joined later in the meeting. Staff in attendance: Austin Nibbs, Administrator, Cathy Smith, General Counsel, Ishmael Meyers, Deputy General Counsel, Asiah Clendinen Gumbs, COO, Glenville Henderson, Investment Analyst, Sakeeda Figueroa, Communication and Member Education Specialist, LeSean Moses, IT, Zaida Castro, Executive Assistant to the Administrator, Roy Moorehead, Chief Security-Havensight Mall, Terence Thomas, Chief Information Technology, and Nikia Coley, Administrative Assistant to the Board of Trustees. Also, present in the meeting were Pedro K. Williams, Board Counsel, Kelsha Williams, Associate in PKW Law Firm, and Stenographer, Desiree Hill. Also, in attendance Mary Moorehead, member of St. Croix Government Retirees Inc. There were several retirees and active members in attendance including the VI Source. Chairman Callwood presented to the Board an item to be added to Regular Session – New Business which was to accept the Investment Committee’s recommendation to implement the revised policy targets as presented by the Investment Advisor (Meketa). A motion was made by Trustee Smith and seconded by Trustee Bowry to add to the agenda, under Regular Session-New Business, to accept the Investment Committee’s recommendation to implement the revised policy targets as presented by the Investment Advisor. The motion passed with Yes 3 (Bowry, Smith, Callwood), 2 Not Voting (Dorsey and Russell) and 2 Absent (McDonald and Liger). Comments and Suggestions from Retirees No Comments from Retirees Comments and Suggestions from Active Members No Comments from Active Members GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 2 Secretary’s Minutes A motion was made by Trustee Smith and seconded by Trustee Bowry to approve the December 22, 2022, Regular Board meeting minutes. The motion passed with Yes 3 (Bowry, Smith, Callwood), 2 Not Voting (Dorsey and Russell) and 2 Absent (McDonald and Liger). Communications and Correspondences None Chairman’s Report Chairman Callwood appeared before the 34th Legislature on December 29th to testify before the Committee of the Whole on Bill No. 34-0370 – “A Resolution mandating the President of the 34th Legislature of the Virgin Islands to institute a civil action against GERS for its failure to implement the provisions of title 3 Virgin Islands Code section 717(b)(17), 717(c), 719(b), 766(b)(17), 766(b)(18), and 766(c).” Trustee Russell raised a concern, originally brought up by a Senator at the December 29th hearing, about the appointment of Trustee Callwood as the GERS Board Chair due to his contractual relationship with the Legislature, because it may present a conflict. Trustee Russell requested that Board Counsel write a memorandum regarding Trustee Callwood’s conflict, with his job position at the Legislature. The Administrator interjected that Mary Moorhead had her hand up to be recognized. Acknowledging the technical difficulties that Mary Moorhead had experienced, Chairman Callwood recognized Mary Moorhead and invited her to read a letter for the record from Acting President of St. Croix Government Retirees Inc., Debra Christopher, regarding the organization's lack of confidence in Trustee Russell being a member of the GERS Board. Administrator’s Report Meetings, Presentations, and Appearances December 29th – Testified at the Committee of the Whole Re: Bili No. 34-0370. January 2nd – Attended Inauguration. January 12th – Briefing with Meketa Re: Rum Cover Over Shortfall and 35th Legislature Orientation. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 3 13th – Meeting with Governor (Cancelled) Re: ARPA Funding Request for Water Infrastructure Replacement Project at Havensight Mall. 20th - Havensight Mall Oversight Committee monthly meeting. 24th – Investment Committee meeting. Member Services Retirement Applications - as of January 15, 2023 Life Certificates Disability Cases – As of January 10, 2023 A total of 263 letters were mailed. 86 Disability Annuitants living in the US 177 Disability Annuitants residing in the Virgin Islands 263 To date, a total of 259 were returned to the office. DISABILITY CASES There is a total of five (5) disability cases pending with our legal unit. REASONS PENDING In Person Medical Exams 0 Disapproved by GERS Physicians 0 Internal/Legal 5 Total Pending Disabilities 5 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total STX 147 111 118 177 143 114 164 143 11 STT 147 164 127 224 172 124 179 171 3 Total 294 275 245 401 315 238 343 314 14 Processed 293 275 245 400 315 236 337 147 0 Remaining 1 0 0 1 0 2 6 167 14 191* 99% 100% 100% 99% 100% 99% 98% 47% 0% GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 4 Non-Disability Cases Life certificates were mailed out in December 2022. None were returned yet. However, in the previous batch of life certificates, a total of 78 were mailed. 75 were returned and we suspended 3 annuities for retirees that did not respond and who were not known to be deceased. We are revisiting the suspension of annuities because the suspension affects the retiree health insurance. So as not to hurt the retiree health insurance status, the recommendation of the Chief, Compliance and Control is to have Payroll hold the checks, until we can communicate further with the retiree or determine the status of the retiree. Compliance and Control - Contribution Processing October 1, 2022 – December 31, 2022 Refunds No. Cases Total No. Cases Completed Amount Pending Regular 38 $2,753,682.24 0 Erroneous 4 5,185.55 15 Employer Share 1 21,693.66 5 Overpayment 60 282,994.01 0 Total 103 $3,063,555.46 20 Death Benefits No. Completed Amount No. of Cases Types 10/1/22-12/31/2022 10/1/22-12/31/2022 Pending Active 5 $ 168,829.01 29 Retired 3 251,702.76 05 Total 8 $ 420,531.77 34 GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 5 Accounting Department Annuity Payments No. of retirees as of January 13, 2023, payroll: 8735 Cumulative dollar paid out from October 1, 2022 – January 13, 2023 - $76,815,028.03. Number of retirees added to the payroll from October 1, 2022 – January 13, 2023. 102 Number of retirees added to the payroll for the January 13, 2022, pay date. 5 Number of retirees expected to be placed on payroll for the January 31, 2023, pay date: 18 Number of retirees deleted from the payroll from October 1, 2022, through January 13, 2023: 100 Note: Gross Retiree Payroll for 1/13/23 was $11,001,202.42 GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 6 LOAN PORTFOLIO FOR THE MONTH ENDING DECEMBER 2022 12/31/2022 STT/STJ STX Active Personal Loans 540 310 230 Retiree Personal Loans 501 282 219 1,041 592 449 MORTGAGES Construction/Home Improvement 18 10 8 Land 16 14 2 Purchase/Refinance 24 18 6 Totals 58 42 16 TOTAL LOANS & MORTGA 1,099 634 465 TOTAL OUTSTANDING December 2022 Total STT/STJ STX Active PL - $ 4,595,866.17 $ 2,842,232.04 $ 1,753,634.13 Retiree PL - 4,093,765.42 2,292,568.54 1,801,196.88 Purchase/Refi - 1,356,565.66 993,749.82 362,815.84 Construction - 1,868,464.18 1,140,681.08 727,783.10 Land Loans - 321,964.23 286,792.22 35,172.01 GRAND TOTAL $ 12,236,625.66 $ 7,556,023.70 $ 4,680,601.96 Refund for Overpayments December 31, 2022 No. of Units Total 24 $15,621.49 GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 7 It was estimated that at the end of the calendar year 2022 approximately 526 loans were scheduled to mature. At December 31, 2022, the actual total loans matured were 800. All personal loans will mature by December 31, 2025, except one loan because of the date of issuance. Operations St. Croix Office Complex • No Issues to Report St. Thomas Office Complex • Awaiting quote for filling potholes in the parking garage. • Planning continues on the acquisition of a new generator for the STT Complex – the electrical design, automatic transfer switch, and the design for a new generator room, which includes the existing generator as a backup. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 8 Havensight Mall Warehouse Demolition The demolition project continues. Hotel Development GERS was asked to provide an authorization letter to CZM for the construction of the Welcome Center on Parcel #4. CZM also required an additional agreement for the construction of the Welcome Center on Parcel #4. GERS prepared and provided such agreement. With this, Haven Development has provided all the necessary information needed for a hearing before the CZM. St. Thomas Historical Trust The St. Thomas Historical Trust Board has secured a collection but working on funding to prepare the space at the White House for the museum. A meeting is scheduled the week of January 23rd to discuss the MOU and a how to move forward (phased approach) with the funding in place. Bronze Statues MOU was signed and notarized. 50% of the Invoice sent for processing. Rental and Electricity Collections – Exhibit A Dec 2022 Total FYTD Arrearages Rental $66,523.91 $201,714.21 $81,405.32 Electric 27,668.58 125,814.95 66,741.57 Total $94,192.49 $327,529.16 $148,146.89 LEASES Division of Personnel Awaiting the finalization of the revised lease. Sent to DOP on December 20, 2022, for final review. Followed up on January 10, 2023. DOP will review and send back shortly. Department of Justice Attorney General Denise George Counts signed the Department of Justice lease. Since her separation, the acting AG Carol Jacobs will re-sign the lease for execution by GERS. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 9 FEMA/INSURANCE Update: FEMA Meeting on Monday, November 7, 2022. Recovery Transition Meeting. Final Numbers $1,920,292.16 St. Thomas and $314,409.37 for St. Croix. Category Title CRC Gross Cost Total Insurance Reductions CRC Net Cost Obligated Federal Share % Cost Share B - Emergency Protective Measures TMUEN01- Generator Usage $275,012.00 $0.00 $275,012.00 $275,012.00 100.00% B - Emergency Protective Measures TMUEN04 - EPM Administrative Building $61,103.40 $0.00 $61,103.40 $61,103.40 100.00% E - Buildings and Equipment TMUEN05-GM82473-GERS Haventsight Security S $466,661.15 $0.00 $466,661.15 $419,995.04 90.00% E - Buildings and Equipment TMUEN02 - GERS Havensight Mall Retail Building $950,330.23 $636,620.34 $319,960.74 $287,964.67 90.00% E - Buildings and Equipment TMUEN07 Administrative Building $153,014.00 $0.00 $153,014.00 $137,712.60 90.00% E - Buildings and Equipment TMUEN08 GERS Havensight Warehouses $2,358,468.20 $1,648,239.91 $710,228.29 $639,205.47 90.00% Z - Management Costs TMUEN06- Cat-Z Management Costs $99,298.98 $0.00 $99,298.98 $99,298.98 100.00% After Administrator Nibbs concluded reading the Administrator’s Report into the record, Chairman Callwood granted Trustee Russell a point of personal privilege to respond to the St. Croix Government Retirees Inc. After Administrator Nibbs concluded reading the Administrator’s Report into the record, Chairman Callwood granted Trustee Russell a point of personal privilege to respond to the St. Croix Government Retirees Inc. According to Trustee Russell, St. Croix Government Retirees Inc. did not support him and the Government Retirees United for Fairness (GRUFF) initiative to pursue the Rum Cover. As a result, GRUFF recommended that Trustee Russell apply for the elected Retiree for the district of St. Croix. Trustee Russell was the only candidate from St. Croix and was selected by default. Another reason is the need for more invitations to St. Croix Government Retirees Inc. meetings. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 10 Committee Reports. (a) Investment Committee – Chairman Callwood reported that the Investment Committee met on Tuesday, January 24th to receive an update from the System’s investment advisors as well as recommended changes to policy targets. (b) Development Committee – No Report. (c) Medical Committee Report - No Report. (d) Budget/Audit Committee Report – No Report. (e) Policy Committee Report – Trustee Russell reported that the Policy Committee meeting was canceled to await the actions of the 34th Legislature for Bill No. 34-0370. Another Policy Committee meeting will be scheduled before the next Regular Board meeting. Treasurer’s Report In the absence of Denise Jeremiah, CFO, the Administrator read the Treasurer’s Report for the System and Havensight Mall for the month ending December 31, 2022, into the record. Total Collections for December 2023 is $13.4M and FYTD is $196.9M. Total Disbursements for December 31, 2022 is $26.1M and FYTD is $81.3M; Net Cash Deficit for December 31, 2022 is $12.7M and a Net Cash Surplus of $115.6M FYTD. Havensight Mall. Total Collections for December 2023 was $467.2K and FYTD $1.5M; Total Disbursements for December 2022 was $537.5K and FYTD is $916.5K and a Net Cash Deficits of $70.3K and Net Cash Surplus of $540K FYTD. Trustee Russell asked Administrator Nibbs how the $30M drawdown is justified with the amount received from the Special Purpose Vehicle. Administrator Nibbs announced that Mr. Glenville Henderson, Investment Analysts, would provide more insight to answer Trustee Russell’s question. Mr. Henderson reported on December 22, 2022, that the portfolio gained a 3% increase, as reported in the November 30, 2022, Investment Report. Trustee Russell requested clarity about when the System can use a percentage of the portfolio for a drawdown so that the System can reduce its drawdowns. Administrator Nibbs answered that the System will always have drawdowns, but it will be the ideal scenario for it to make at least 25% in the market. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 11 A motion was made by Trustee Smith and seconded by Trustee Russell to accept the Treasurer’s for December 31, 2022. The motion passed with 5 Yes (Bowry, Dorsey, Russell, Smith, and Callwood), 2 Absent (Liger and McDonald). Administrator Nibbs reported that Ex-Officio member Cindy Richardson had joined the meeting. Investment Officer’s Report Mr. Glenville Henderson, Investment Analysts, read the investment report for the month ending December 31, 2022, into the record. The Total Plan returned -2.1% for the month of December 2022; Year-To-Date. The portfolio was down -6.8% YTD and at the beginning of the year 1.2%. Total Domestic Equity returned -5.8% and was in lined with its benchmark. Total International Equity returned -1.2% and underperformed its benchmark by 0.5%. Total Fixed Income returned -0.2% and outperformed its benchmark by 0.2%. Notable Fund Performance: Russell 3000 index returned -5.8%. US AGG Bond Index returned -1.7%. US TIPS index returned -1.5%. US High YLD Bond Index Return -1.2%. Cash Flow Activity: Month ended with $489.5M; Raised $74M for December; Liquidated Pugh Capital Management to reallocate to new policy targets. Began the month with $514.8M; Net Cash Flow of $-15M (this includes the $30M in December 2022 drawdown); Income $802.6K, Loss of -$11M; Ending Market Value $489.5M. Custodial/Consulting/Management Fees: No fees for the month of December. CYTD; $431K Calendar YTD; $108K Fiscal YTD. A motion was made by Trustee Russell and seconded by Trustee Dorsey to accept the Investment Officer’s Report for December 31, 2023. The motion passed with 5 Yes (Bowry, Dorsey, Russell, Smith, and Callwood) and 2 Absent (Liger and McDonald). Regular Session A. New Business GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 12 (i). Election of Officers Trustee Russell recommended postponing the Election of Officers to inform active members and retirees since it was not announced within the 30 days prior to the election. According to the Board Counsel, the election of officers was announced at the last Board meeting on December 22, 2022. The notice about the election of officers is not for the general public, instead it is an election among trustees of the GERS Board. Trustee Russell made a motion seconded by Trustee Dorsey to postpone the election of officers so that it is announced to the public and active members. The motion failed with 2 Yes (Dorsey and Russell), 3 No ( Bowry, Smith, and Callwood) and 2 Absent (Liger and McDonald). The motion fails. Trustee Smith made a nomination for Trustee Callwood to serve as Chairman and Trustee Bowry to serve as Vice-Chair and both Trustee Callwood and Trustee Bowry accepted their nominations. Trustee Dorsey made a nomination for Trustee Russell to serve as Chairman and Trustee Smith to serve as Vice-Chair. Trustee Russell accepted his nomination, but Trustee Smith declined to serve as Vice-Chair. Trustee Russell nominated himself to serve as Chairman and Trustee Dorsey as vice-chair and both Trustee Russell and Trustee Dorsey accepted their nominations. Before the voting process started, Trustee Russell recommended that the Trustees nominated as Chair and Vice-Chair submit a resume, primarily to address concerns such as uncertainty about how Trustee Callwood qualified to serve as Chair due to his employment relationship with the Legislature. Trustee Russell also questioned the secret ballot voting process for the election of officers. Board Counsel Williams clarified that the rules do not specify how the election is held. Based on past practice - past elections, Trustees were asked to submit ballots and forward them to the Secretary of the Board. The Trustees can change the approach if so desired. In response to Trustee Russell’s concerns about Trustee Callwood serving as the Board Chairman, Trustee Callwood pointed out that the GERS Board has five seats with specific criteria, such as the position he holds as Elected Retiree for the St. Thomas District. Trustee Russell made a motion and seconded by Trustee Dorsey to conduct the election of officers by voice vote. The motion failed with 2 Yes (Dorsey and Russell) and 4 No (Bowry, Liger, Smith, Callwood) and 1 absent (McDonald). GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 13 Administrator Nibbs read the voting of election officers results into the record. The results were 4 votes for Trustee Callwood to serve as Chairman and 2 votes for Trustee Russell to serve as Chairman. The only vote that was not texted to the Secretary of the Board was Trustee Dorsey’s (by phone). Trustee Russell requested to know who wrote the opinion about Trustee Callwood serving as Board Chair does not create a conflict of interest. Board Counsel will research whether the opinion was a written opinion or not and a copy will be submitted to Trustee Russell. The opinion submitted by Board Counsel was that Trustee Callwood qualified to serve as a Board member and was not an employee of the Legislature and did not address Trustee Callwood current position as Chairman. The Board Counsel also stated that it is up to the Board to decide whether or not the Chair can represent them appropriately before the Legislature or other entities. Trustee Russell will submit his concerns to the Board Counsel and Trustees. (ii) Consideration of Electronic Information Dissemination Policy. Chairman Callwood is seeking the support of the Trustees to modify the current GERS Board of Trustees documents dissemination policy. Trustees have requested that the System print hard copies of documents for meetings, and it is a time-consuming task for the staff. Trustees have been assigned an electronic device and a GERS e-mail address. Trustee Dorsey sent an email on December 8th requesting to be exempt. Chairman Callwood denied his request. Chairman Callwood requested that the Trustees accept the adoption of the Information Dissemination Policy. Trustee Dorsey mentioned for the record that he does have a medical situation and will be returning electronic devices to the System. Trustee Russell recommended not to have restrictions regarding hardcopies and that the policy be withdrawn. Chairman Callwood disagreed because the continuity of printing creates security issues, breach of confidentiality and the System has purchased a laptop for a Trustee. Trustee Russell then requested a hotspot. A motion was made by Trustee Smith to adopt and approve the Chairman’s recommendation that the electronic dissemination of information to the Trustee is the official means of distributing GER’s Documents and Trustee’s E-mail. Trustees who don’t have GERS electronic devices will receive hard copies of documents. Motion dies for a lack of a second. Board Counsel Williams clarified that the Board currently has no policy or provision for how the information is disseminated. If this policy is not adopted, it is still up to the Chairman how information is disseminated. If the policy is adopted it will provide the ability for information to be GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 14 disseminated electronically to those that have an issued GERS electronic device and hardcopies for Trustees that do not have an issued GERS electronic device. Trustee Russell recommended tabling the policy and having the Policy Committee review the policy and the Committee make a recommendation to the Board of Trustees. Another motion was made by Trustee Smith and seconded by Trustee Liger to adopt and approve the Chairman’s recommendation that the electronic dissemination of information to the Trustees is the official means of distributing GERS documents; providing the ability for information to be disseminated electronically to those that have an issued GERS electronic device and hardcopies for Trustees that do not have an issued GERS electronic device. The motion was tabled for future discussion. (iii) Authorized Administration to begin Negotiating with Vendor or Vitech Software Update Terence Thomas, Chief Information Technology Officer, reported to the Board of Trustees that the most recent challenge is the two-factor authentication, specifically for the member self-service module. This matter was brought to the Board’s attention at the board retreat and IT provided a presentation regarding the vulnerability of the System, because the V3 program (the pension management system for GERS) needs to be upgraded to Version 10. As time moves forward, it is difficult for the vendor of the software to provide support for the version that the V3 System operates which is Version 8. Version 8 of the V3 System does not support two-factor authentication. Administrator Nibbs mentioned that the topic was also discussed at Budget Committee meetings and the expense was not approved because the total budget was limited to $15.6M based on the Actuary’s recommended administrative expenses for FY 2023. The cost of the upgrading is about $7.5M spread over the project life. An option pursued in the past was for GERS to file for a grant from the Department of Interior Technical Systems and the request was posted on their website. However, GERS has not received any formal response as yet. Trustee Russell asked if it is best to stick with the vendor or switch to another vendor that is more conducive to meeting the System’s needs. Mr. Thomas said that there are some needs, requirements and constraints when switching vendors; however, the migration to move the System to Version 10 is a shorter window to deal with. Trustee Dorsey requested to know if it is possible to have GERS seek the assistance of central government like Cordell Rhymer and if there is a system that can be looked at as a sample and be ahead of the game. Currently, GERS is collaborating with the Central Government, Division of Personnel on a NOPA Center Feed so that NOPAs are not manually entered into the System, which will cut down on errors. The Division of Personnel and GERS work on two different systems. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 15 A motion was made by Trustee Smith and seconded by Trustee Bowry to authorize the Administrator to begin negotiating with the vendor for Vitech Software Update. The motion passed with 5 yes (Bowry, Dorsey, Russell, Smith, Callwood) and 2 absent (Liger and McDonald). (iv) To accept the Investment Committee Recommendation to implement the revised policy targets as presented by the Investment Advisor. Administrator Nibbs reported that Meketa made a presentation at the January 24th in the Investment Committee meeting. Also, the board accepted targets favorable to the portfolio. However, the initial policy target did not include cash which GERS usually reserves $20M in cash for drawdown or shortfalls, about 1 month of benefit payments considering the GERs payroll. Discussions took place for GERS to keep the reserve and accept the revised policy targets based on the recommendation of Meketa. A motion was made by Trustee Russell and seconded by Trustee Bowry to accept the Investment Committee Recommendation to implement the revised policy targets as presented by the Investment Advisor. The motion pass with 6 yes (Bowry, Dorsey, Liger, Russell, Smith, Callwood) and 1 absent (McDonald). A motion was made by Trustee Smith and seconded by Trustee Liger go into Executive Session. This portion of the meeting will be closed to the public for matters pertaining to trade secrets or financial or commercial information or personal or legal matters; or matters whose premature will frustrate the implementation of the proposed agency action. The motion passed with 6 Yes (Bowry, Dorsey, Liger, Russell, Smith, Callwood), and 1 Absent (McDonald). Attorney Marie Thomas Griffith, Outside counsel joined the meeting in Executive Session to discuss legal matters. Executive Session A motion was made by Trustee Bowry and seconded by Trustee Dorsey to come out of Executive Session. The motion passed with 4 Yes (Bowry, Dorsey, Liger, and Callwood), and 3 Absent, (McDonald, Russell, and Smith). Regular Session Privileges of the Floor None GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2023 16 Adjournment A motion was made by Trustee Bowry and seconded by Trustee Dorsey to adjourn the meeting. The motion passed with 4 Yes (Bowry, Dorsey, Liger, and Callwood), and 3 Absent, (McDonald, Russell, and Smith). The meeting adjourned at approximately 1:28pm. The minutes for the Regular Session were transcribed from the zoom recording by Zaida Castro, Executive Assistant to the Administrator and reviewed and edited by the Secretary of the Board. Austin L. Nibbs, CPA, CGMA Administrator/CEO Secretary, GERS Board of Trustees Government Employees’ Retirement System Administrator's Report – February 23, 2023 GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM ADMINISTRATOR’S REPORT Regular Board Meeting February 23, 2023 Government Employees Retirement System Administrator's Report- February 23, 2023 2 ADMINISTRATOR'S REPORT Content Page Meetings, Presentations, and Appearances 3 Member Services 4 Compliance & Control/Contributions Processing 5 Accounting – Retiree Payroll 6 Loans 7 - 8 Operations (Buildings) 8 Havensight Mall 9 - 10 Rentals/Leases 10 FEMA 11 Exhibit A – Rentals 11 Government Employees Retirement System Administrator's Report- February 23, 2023 3 Meetings, Presentations, and Appearances February 2 Site Visit with Board at Havensight Mall. 9 Meeting with E-Finity Distributor re: Exploring Microturbine grid at Havensight Mall. 10 Meeting with attorneys re: Outstanding WICO issues. 15 Havensight Mall Oversight Committee meeting. 16 Meeting with RLSH CEO Re: Outstanding deductions/contributions. 17 Attended 35th Legislature Orientation. 21 Attended Investment Committee Meeting. 23 To attend the CZM Hearing Re: Haven Development LLC Government Employees Retirement System Administrator's Report- February 23, 2023 4 Member Services Retirement Applications - as of February 15, 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total STX 147 111 118 177 143 114 164 142 19 STT 147 164 127 224 172 126 179 178 9 Total 294 275 245 401 315 240 343 320 28 Processed 293 275 245 401 315 238 339 192 0 Remaining 1 0 0 0 0 2 4 128 28 163* 99% 100% 100% 100% 100% 99% 99% 60% 0% Life Certificates Disability Cases – As of February 7, 2023 A total of 263 letters were mailed. 86 Disability Annuitants living in the US 177 Disability Annuitants residing in the Virgin Islands 263 To date, a total of 259 have been returned to the office. Four (4) members were suspended from the Retirees’ Payroll due to non-compliance with the completed Life Certificates. There are six (6) disability cases pending with our legal unit. REASONS PENDING In Person Medical Exams 2 Disapproved by GERS Physicians 0 Internal Legal 4 Total Pending Disablities 6 Non-Disability Cases Life certificates were mailed out in December 2022. None were returned as yet. However, in the previous batch of life certificates, a total of 78 were mailed. 75 were returned and we suspended 3 annuities for retirees that did not respond and who were not known to be deceased. We are revisiting the suspension of annuities because the suspension affects the retiree health insurance. So as not to hurt the retiree health insurance status, the recommendation of the Chief, Compliance and Control is to have Payroll hold the checks, until we can communicate further with the retiree or determine the status of the retiree. Government Employees Retirement System Administrator's Report- February 23, 2023 5 Compliance and Control - Contribution Processing October 1, 2022 – January 31, 2023 Refunds No. Cases Total No. of Cases Completed Amount Pending Regular 47 $3.492,031.76 0 Erroneous 2 5,764.56 15 Employer Share 0 21,693.66 5 Overpayment 23 348,380.50 0 Total 72 $ 3,867,870.48 20 Death Benefits No. Completed Amount No. of Cases Types 10/1/22-01/31/2023 10/1/22-01/31/2023 Pending Active 5 $ 489,071.39 25 Retired 1 300,879.52 4 Total 6 $ 789,950.91 29 Government Employees Retirement System Administrator's Report- February 23, 2023 6 Accounting Department Annuity Payments No. of retirees as of February 15, 2023, payroll: 8737 Cumulative dollar paid out from October 1, 2022 – February 15, 2023 700 Pensioners $0.00 702 Service Retirement Annuities 96,441,274.70 703 Survivors' Annuities 653,429.39 704 Duty-Connected Death Annuities 961.29 705 Duty-Connected Disability Annuities 1,166,420.66 706 Non-Duty Disability Annuities 579,110.56 Totals 98,841,196.60 Number of retirees added to the payroll from October 1, 2022 – February 15, 2023. 135 Number of retirees added to the payroll for the February 15, 2023, pay date. 14 Number of retirees expected to be placed on payroll for February 28, 2023 pay date: 19 Number of retirees deleted from the payroll from October 1, 2022, through February 15, 2023: 131 Note: The Gross Retiree Payroll for 2/15/23 was $ 11,015,512.83. Government Employees Retirement System Administrator's Report- February 23, 2023 7 LOANS PORTFOLIO FOR THE MONTH ENDING JANUARY 2023 1/31/2022 STT/STJ STX Active Personal Loans 513 295 218 Retiree Personal Loans 492 276 216 1,005 571 434 MORTGAGES Construction/Home Improvement 18 10 8 Land 16 14 2 Purchase/Refinance 22 17 5 Totals 56 41 15 TOTAL LOANS & MORTGAGES 1,061 612 449 TOTAL OUTSTANDING January 2023 Total STT/STJ STX Active PL - $ 4,261,521.65 $ 2,667,806.51 $ 1,593,715.14 Retiree PL - 3,971,126.80 2,204,333.58 1,766,793.22 Purchase/Refi - 1,353,943.53 992,259.93 361,683.60 Construction - 1,859,652.99 1,135,215.04 724,437.95 Land Loans - 319,232.63 284,355.39 34,877.24 GRAND TOTAL $ 11,765,477.60 $ 7,283,970.45 $ 4,481,507.15 Refund for Overpayments January 31, 2023 No. of Units Total 11 $7,779.77 The chart below shows total loans projected to mature in calendar years 2023 and 2024. All personal loans are expected to mature by December 31, 2025, except one loan because of the date of issuance. Government Employees Retirement System Administrator's Report- February 23, 2023 8 Projected Loan Maturity by Calendar Year a n d oan Type Loan Type Total Loans Projected to Mature as of December 2023 Total Loans Projected to Mature as of December 2024 Active Personal Loan 129 155 Retiree Personal Loan 147 188 Mortgage Construction 0 0 Purchase Refinance 2 2 Land 2 0 Total Loans Maturing 280 345 Operations St. Croix Office Complex PROJECTS PENDING: Repaving of the rear parking lot at the Casino Control Commission was completed. Installation of a roof with guttering over the maintenance shed is in progress. St. Thomas Office Complex No major issues to report. Government Employees Retirement System Administrator's Report- February 23, 2023 9 Havensight Mall Warehouse Demolition Work continues on Warehouse 4. WAREHOUSE J Worked resumed on Warehouse J with the arrical of the exterior and roof panels .Completion date expected in June 2023. Once comstruction is compelted on Warehouse J. Warehouses 4a, 5 and the welcome center will be demolished. Government Employees Retirement System Administrator's Report- February 23, 2023 10 Hotel Development Haven Development received notification from DPNR that their CZM permit was complete, and a Public Hearing was scheduled for Thursday February 23, 2023. Generator The GERS through their contractor, Import Supply, was able to source a brand new 2022/2023 CAT 2- megawatt generator from RIMCO (official CAT dealer/rep) through Islands Generators in PR. Unit is scheduled to be on island in approximately 80-90 days. Awaiting one additional quote for the removal and cleaning of the generator yard. Items needed for arrival: Concrete pad, generator housing, switch gears/transfer switch. Electrical engineers that installed the current generators will be called in to consult. CAT officials will be onsite at start up to ensure operations, commission and warranty. Project anticipated to be completed by August of 2023 (barring any unforeseen obstacles). Parking Lot Department of Public Works (DPW) has agreed to patch the potholes around the property with asphalt purchased by GERS. Work to begin based on non-ship days and availability of DPW. Office Buildings Rental and Electricity Collections – Exhibit A Jan 2023 Total FYTD Arrearages Rental $78,010.95 $279,725.16 $92,089.43 Electric 31,259.25 157,074.20 71,597.45 Total $109,270.20 $436,799.36 $163,686.88 LEASES ResCare (Job Corps) New Entity took over Job Corps which is now call Equus Workforce Solutions. Paperwork was forwarded to legal to draft a new 5-year lease agreement. Division of Personnel DOP responded on January 14, 2023, with a minor revision to which GERS agreed with. GERS sent final lease for signatures on February 1, 2023. GERS is awaiting Attorney Baker – Office of the Governor Acting Chief Legal Counsel, suggested language. Department of Justice Lease was resigned by Attorney Jacobs and Mr. Nibbs. DOJ will forward to Property and Procurement for additional review and signatures. Government Employees Retirement System Administrator's Report- February 23, 2023 11 FEMA/INSURANCE: Extension letter (Until March 2024) to VITEMA and Director Octalien Williams at the Office of Disaster recovery will be sent by February 15, 2023. Project at Havensight Mall Demolition, Warehouse J, Parking lot and green space slated , as per the FEMA award, to be completed by March 2023. RENTAL – EXHIBIT A SCHEDULE OF RECEIPTS & DISBURSEMENTS PERIOD ENDING January 31, 2023 THE GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM Receipts from collections Loan Repayment 707,990 $ 815,345 $ 2,766,814 $ 3,548,326 $ Rent from Tenants/Utilities 23,096 $ 59,032 $ 203,808 $ 189,648 $ Employer Retirement Contributions 7,925,260 $ 8,459,575 $ 30,339,927 $ 32,078,166 $ Employee Retirement Contributions 4,659,646 $ 4,058,951 $ 17,557,226 $ 16,210,924 $ Parking Facility 1,240 $ 340 $ 2,770 $ 2,060 $ GERS Bond Note Funding - $ - $ 157,996,500 $ - $ Miscellaneous 278,444 $ 18,824 $ 1,596,708 $ 787,399 $ Total Collections 13,595,676 $ 13,412,067 $ 210,463,753 $ 52,816,523 $ Disbursements Annuity Payments 22,620,202 $ 21,891,738 $ 95,727,129 $ 89,548,869 $ Administrative Expenses 1,090,859 $ 1,005,700 $ 5,311,880 $ 4,389,263 $ Personal Loans 1,337 $ 4,445 $ 32,172 $ 41,294 $ Mortgage Loans 7,444 $ 1,863 $ 33,376 $ 51,922 $ Retiree Loans - $ 468 $ 4,463 $ 8,957 $ Land Loans - $ - $ 227 $ 34 $ Refund of Contributions 930,181 $ 747,482 $ 4,665,742 $ 2,800,210 $ Total Disbursements 24,650,023 $ 23,651,696 $ 105,774,989 $ 96,840,549 $ Net Cash Surplus/(Net Cash Deficit) (11,054,347) $ (10,239,629) $ 104,688,765 $ (44,024,026) $ (59,800,835) $ (63,072,382) $ Synopsis In the month of January collected 55 % ($13,595,676 ) of what was needed for disbursements ($24,650,023) Year to date Fiscal 2023 Admnistrative expenses was 34% ($5,311,880) of budget ($15,600,000) Year to date withdrawal from the investment portfolio was $50M GOVERNMENT EMPLOYEES' RETIREMENT SYSTEM Schedule of Receipts and Disbursements Month Ending January 31, 2023 January-23 January-22 YTD Fiscal 2023 YTD Fiscal 2022 Loan Disbursements: Personal Loans Refund 1,337 1,337 Mortgage Loans Insurance 7,444 7,444 TOTAL 8,781 Miscellaneous: Annuities (deceased pensioners checks) 3,704 Delinquent & Investment Fee 5,312 ADEC 268,470 Structured Service Fees 933 NSF Fee 25 TOTAL 278,444 GOVERNMENT EMPLOYEES RETIREMENT SYSTEM Supplemental Information January 2023 Personnel Services 638,691 394,028 602,296 386,213 2,021,228 Fringe Benefits 189,482 159,281 185,808 190,102 724,673 Supplies 12,292 15,299 6,040 6,559 40,189 Other Services and Charges 148,863 344,175 1,246,707 272,984 2,012,729 Utilities 86,568 10,220 87,338 181,725 365,850 Capital Outlay - 19,945 200,698 54,288 274,931 Subtotal 1,075,896 942,947 2,328,887 1,091,870 5,439,600 Reimbursement Electricity (61,138) (6,434) (59,138) (1,010) (127,721) Total 1,014,758 $ 936,513 $ 2,269,749 $ 1,090,859 $ 5,311,880 $ GOVERNMENT EMPLOYEES RETIREMENT SYSTEM ADMINISTRATIVE EXPENSES FISCAL YEAR 2023 10/31/22 11/30/22 12/31/22 01/31/23 Total