June Board Meeting Summary

The Public School and Education Employee Retirement Systems of Missouri (PSRS/PEERS) Board of Trustees convened on June 15, 2026, at the PSRS/PEERS offices at 3210 W. Truman Blvd., Jefferson City, Missouri. In attendance were Board members Beth Knes, Katie Webb, Chuck Bryant, Dr. Nate Moore, and Amanda Perschall. Also present were Executive Director Dearld Snider, Chief Operating Officer Sarah Swoboda, Chief Investment Officer Craig Husting, Chief Counsel Mike Moorefield, Director of Internal Audit Jeff Hyman, Chief Financial Officer Brandon Robertson, Director of Human Resources Michelle Varcho, Director of Member Services Nicole Hamler, Chief Technology Officer Lisa Scheulen, Chief Information Security Officer Jake Woratzeck, Director of Executive and Board Administration Jennifer Martin, and various other PSRS/PEERS staff members.

BUDGET AND AUDIT COMMITTEE

Approval of Minutes

The Budget and Audit Committee meeting minutes from the April 19, 2026, meeting were approved by unanimous vote.

Annual Banking Resolution

CFO Brandon Robertson and Deputy CFO Tory Brondel reviewed a memo regarding a banking resolution. The resolution provides continuing authority to Executive Director Dearld Snider, COO Sarah Swoboda, and CIO Craig Husting to make necessary changes, when needed, related to the Systems' banking relationship with Central Trust Bank. The banking resolution authorizes appropriate individuals to execute documents with the bank without additional approval by the Board of Trustees. The resolution automatically expires each June 30 or when a new resolution is received by Central Trust Bank. The Budget and Audit Committee voted unanimously to bring the resolution to the full Board for final approval.

Discussion and Approval of the Fiscal Year 2026-2027 Budget

Robertson and Brondel reviewed the fiscal year 2026-2027 proposed budget request. They provided information regarding the processes used to develop the budget. Leaders compiled the budget based on the Systems' mission of providing retirement security to Missouri's educators and public school employees in the most efficient and cost-effective manner possible. Robertson provided the following budget highlights and provided detailed discussion on significant changes from the prior year.

As part of the annual budgeting process, Management prepares annual key initiatives. Each department develops and reviews key initiatives annually under the leadership of the department director. Management then reviews the key initiatives to ensure alignment with the Systems' mission, goals, focus areas, and strategic objectives. Annually, Management reviews each key initiative to determine whether it was completed and what measurable effect (if measurable) each action had on the Systems' strategic objectives. Key initiatives vary in scope and duration for completion. The Systems currently have several multi-year key initiatives in progress. Robertson reviewed the multi-year key initiatives, fiscal year 2026-2027 key initiatives, and key initiatives completed during the 2025-2026 fiscal year.

The total budget request has increased by 4.1% from the fiscal year 2025-2026 budget. An expected 2.2% increase in benefit payments to members, due to cost-of-living increases and growth in the number of retired members on the payroll, as well as an expected 14.1% increase in investment fees, due to growth in the invested assets of the Systems, are driving the overall increase. Investment fees are paid and budgeted in accordance with current legal contracts. The Systems account for and budget all investment fees including performance and incentive fees. Actual expenses will directly depend on the market environment.

The budget request also includes an increase of approximately $700,000 (or 4.4%) in investment administrative expenses. Investment administrative expenses consist primarily of internal investment staff (salary, benefits) and related costs (office expenses, technology). Investment returns are reported net of investment fees and investment administrative expenses. The investment administrative expense budget reflects an expected increase in cost for technology and office space as the Systems continue to invest in the internal investment team and infrastructure to achieve net savings when considering external investment management and consulting fees. Budgeted increases and decreases for personnel and other investment administrative expenses were generally minor and/or inflationary.

The total administrative budget is made up of the administrative expense budget and the capital asset budget (items over $10,000 that are capitalized). Administrative expenses have increased by approximately $1,100,000 (or 3.6%) from the previous year. The increase is attributed to the addition of two full-time administrative personnel positions and expected technology-related costs, which were partially offset by a reduction in anticipated communication expenses as more members opt for digital-only transmission of communications and information.

Capital assets are expected to increase from the previous year due primarily to the expansion of office space and replacement of retired technology infrastructure.

Throughout the proposed budget request, the Systems have decreased the budget where appropriate. However, the overall proposed budget request has increased to meet the Systems' long-term goals and strategic objectives. The Systems' administrative expenses are funded through investment earnings.

The Budget and Audit Committee voted unanimously to bring the proposed budget to the full Board for final approval.

Public Comment

None

REGULAR BOARD MEETING

System Operations

Approval of Minutes

The open session minutes from April 19-20, 2026, Board meetings were approved by unanimous vote.

Order of Business

The order of business was approved with no changes.

Other

None

Investment Report

Performance Report for March 31, 2026

CIO Craig Husting reviewed the investment performance for the period ending March 31, 2026.  The one-year PSRS/PEERS investment return was reported as 11.5%, while the fiscal year return (July 1, 2025, through March 31, 2026) was reported as 5.4%.

Ongoing Investment Activity

Husting reviewed ongoing investment activities, which included estimated investment performance through May 31, 2026. The estimated fiscal year investment return (July 1, 2025, through May 31, 2026) was reported as approximately 12.4%. Husting discussed the investment markets and the current PSRS/PEERS asset allocation.

Real Estate Portfolio Review

Susan Conrad and Chhayhea Sam from PSRS/PEERS Investments reviewed the Systems' Real Estate portfolio including program objectives, guidelines, and long-term results. The 10-year annualized return for the Real Estate composite for the period ended March 31, 2026, was 6.2%.

Management Report

Annual Banking Resolution

CFO Brandon Robertson and Deputy CFO Tory Brondel reviewed a memo regarding a banking resolution, which was unanimously approved earlier in the day by the Budget and Audit Committee. The resolution provides continuing authority to Executive Director Dearld Snider, COO Sarah Swoboda, and CIO Craig Husting to make necessary changes related to our banking relationship with Central Trust Bank. The Board approved the resolution by unanimous vote.

Approve Budget for Fiscal Year 2026-2027

Robertson and Brondel summarized the proposed fiscal year 2026-2027 budget, as presented to and unanimously approved earlier in the day by the Budget and Audit Committee. The Board approved the proposed budget by unanimous vote.

Adopt changes to the Actuarial Assumptions and Methods (Funding Policy)

Robertson presented a review of the 2026 Actuarial Experience Study, which was presented to the Board in April by the System's retained actuary, PwC, as well as additional information and analysis that was requested by the Board after that presentation.

The actuarial experience study reviews the differences between the Systems' assumed and actual experience over multiple years (typically five to 10 years), with the goal of examining the trends related to actual experience and recommending changes to assumptions, if needed. The Systems perform an experience study at least every five years. The purpose of the studies are to confirm that the actuarial assumptions (economic and demographic) used in the annual valuations are: 1) reflective of the actual demographics and behaviors of the members, to the extent historical experience is measurable and expected to be an indicator of future experience, and 2) reflective of current economic conditions affecting members and their benefits. The actuarial methods utilized by the Systems for smoothing volatility and orderly financing of the benefits are also reviewed as part of the studies.

The study indicated that actual experience of the Systems over the past five years was generally close to the assumptions that were utilized. There were no surprises in the results. However, inflation levels remaining higher than pre-pandemic levels, as well as small changes in the recent retirement, mortality, turnover, and salary growth experience of members prompted proposed refinements to various assumptions by PwC. The most impactful proposed assumption change was an increase to the cost-of-living adjustment (COLA) assumption.

PwC also recommended refinements to certain actuarial methods for smoothing investment returns, amortizing unfunded liability, and reflecting the timing of contributions, based on evolving standards of practice within the actuarial community and addressing feedback from the latest actuarial audit. These recommended changes were minor and/or had little impact on the funded status and actuarially determined contribution (ADC) rates of the Systems but would serve to increase the sensitivity of the ADC rates to future gains/losses.

At the Board's request, additional research and analysis related to the actuarial methods was undertaken by PwC and staff after the April meeting to more fully present to the Board the range of methods utilized in actuarial practice and their prevalence among other public pension systems. That research and analysis was presented to the Board and generally reaffirmed the initial recommendations by PwC. However, PwC refined their initial recommendation for reducing the unfunded liability amortization period to reflect a phase-in approach versus immediate reduction in period to mitigate the increase in sensitivity of the Systems to gains/losses.

The PSRS and PEERS Actuarial Funding Policies were updated to reflect all final recommendations provided by PwC. The Board of Trustees approved the updates to those Policies by unanimous vote, thereby adopting the recommended actuarial assumptions and methods. The updated actuarial assumptions and methods will be reflected in future actuarial valuations and analysis, beginning with the June 30, 2026, actuarial valuations of the Systems.

Legislative Update

Mike Moorefield also presented the June end-of-legislative-session update.

Moorefield reported during the 2026 legislative session, over 3,000 bills were filed, with 158 tracked for their potential impact on PSRS/PEERS. Ten fiscal note requests were filed on legislation that could impact the Systems, and 11 bills were on the legislative Priority Track.

The General Assembly Truly Agreed To and Finally Passed 17 appropriations bills and 84 non-appropriations bills and joint resolutions during the 2026 session. Of the 84 non-appropriations bills, no legislation passed negatively impacted PSRS/PEERS.

Priority Track legislation for PSRS/PEERS included bills related to investment mandates, system governance, and modifications to retirement benefits. HB 2144, which sought to double the PSRS death benefit, was ultimately not advanced due to its substantial fiscal impact. Legislation that did not pass that could have negatively impacted PSRS/PEERS' fiscal condition include a measure to double the PSRS death benefit, to increase cost-of-living adjustments, and to expand the legal limits on working after retirement.

In only one other year since 2017 — 2021 — has no legislative measures passed that impacted PSRS/PEERS. Additionally, since calendar year 2021, no legislative action enacted into law has negatively impacted PSRS/PEERS. From 2022 to date, 14 provisions have been put into law that either positively impact the Systems or do not harm the Systems' financial and operational condition.

CPI-U Update

Snider reviewed the COLA policy that was set by the Board of Trustees at their Nov. 3, 2017, meeting. According to the policy, COLAs may be granted based on the CPI-U as follows:

Snider explained that the Consumer Price Index for Urban Consumers (CPI-U) is calculated by the Bureau of Labor Statistics (BLS). The CPI-U is the measure of the change in prices of goods and services purchased by urban consumers between any two time periods. A PSRS/PEERS regulation requires that the time period for the CPI-U calculation used in the determination of a COLA be from June to June. Based on the values provided by the BLS, the CPI-U is 3.89% through May 31, 2026.

Public Comment

None

Other

None

Closed Session

The Board went into closed session at 12:05 p.m.

Adjournment

The Board adjourned at 1:08 p.m.

This summary is not the official minutes of the PSRS/PEERS Board of Trustees meeting. The official minutes will be approved at the next PSRS/PEERS Board of Trustees meeting and will be posted to our website at that time.