December 2016 Board Meeting

JOINT MEETING OF THE BOARD OF TRUSTEES AND
INVESTMENT ADVISORY COMMITTEE

ERS Building – Board Room
200 E. 18th Street, Austin, Texas 78701
December 1 - 2, 2016

> Meeting materials
> Complete presentation

Joint Meeting of the ERS Board of Trustees and Investment Advisory Committee

1. Review and Approval of the Minutes to the August 16, 2016 Joint Meeting of the Board of Trustees and Investment Advisory Committee (video)

2. Review and Discussion of ERS’ Asset Allocation Study:
a. Featured Speaker Michael Hood on Asset Allocation (video)
b. Presentation of Risk Survey Results (video)
c. Capital Market Assumptions (video)

3. * Discussion and Training Regarding Ethics and Fiduciary Responsibility (video)

4. * Review and Discussion of ERS Retirement Plans and Actuarial Valuation Reports for Funding as of August 31, 2016 (video)

5. * Review and Discussion of the Investment Performance of the System’s Assets:
a. Fiscal Year 2016 Investment Performance (video)
b. Fiscal Year 2016 Global Investment Performance Standards Report  (video)
c. Third Calendar Quarter of 2016 Investment Performance (video)

6. * Review and Discussion of the Risk Management and Applied Research Program (video)

7. Review, Discussion and Consideration of ERS’ Emerging Manager Program (video)

8. Chief Investment Officer’s Report (video)

9. ADJOURNMENT OF THE JOINT MEETING OF THE BOARD OF TRUSTEES AND THE INVESTMENT ADVISORY COMMITTEE AND RECESS OF THE BOARD OF TRUSTEES – The Board of Trustees will reconvene as a Committee of the whole on Friday, December 2, 2016 at 8:00 a.m. to consider Audit and Board agenda items. (video)

Meeting of the ERS Board of Trustees Audit Committee

10. Review and Approval of the Minutes to the August 16, 2016 ERS Audit Committee Meeting (video)

11. Presentation, Discussion and Consideration of Audit Committee Agenda Items:
a. Internal Audit Reports (video)
b. Internal Audit Administrative Items (video)

12. ADJOURNMENT OF THE ERS BOARD OF TRUSTEES AUDIT COMMITTEE – Following adjournment of the ERS Audit Committee, the Board of Trustees will take up the remaining agenda items. (video)

Meeting of the ERS Board of Trustees

13. Review and Approval of the Minutes to the August 16, 2016 meeting of the Board of Trustees (video)

14. Executive Session – In accordance with section 551.074, Texas Government Code, the Board of Trustees will meet in executive session to evaluate the duties, performance and compensation of the Internal Auditor of the Employees Retirement System of Texas. Thereafter the Board may consider appropriate action in open session. (video)

15. Review, Discussion and Selection of the Third-Party Administrator for HealthSelectSM of Texas, Including Consumer Directed HealthSelectSM (video)

16. Review and Discussion of the Deferred Compensation Program Texa$aver 401(k) and 457 Plans and Monitoring Strategy Overview (video)

17. Review, Discussion and Consideration of the Texas Employees Group Benefits Program:
a. Health Insurance Financial Status Update for Fiscal Year 2016 and Outlook for Fiscal Year 2017 (video)
b. GBP Medicare Plans and Monitoring Strategy Overview (video)
c. Dental Insurance Plans and Monitoring Strategy Overview (video)
d. Basic and Optional Term Life, Accidental Death and Dismemberment Plans Monitoring Strategy Overview (video)
e. Group Vision Care Program and Monitoring Strategy Overview (video)
f. Disability Plans and Monitoring Strategy Overview (video)

18. Review and Discussion of the Texas Employees Group Benefits Program: TexFlex Program and Monitoring Strategy Overview (video)

19. Review, Discussion and Consideration of the Texas Employees Group Benefits Program: Actuarial Valuation of Retiree Health Insurance Benefits as of August 31, 2016 (video)

20. Review, Discussion and Consideration of Reappointment of ERS Investment Advisory Committee Member with Term Expiring December 31, 2016 (video)

21. Executive Director Agency Update (video)

22. Set 2017 Meeting Dates for the Joint Meeting of the ERS Board of Trustees and Investment Advisory Committee, the Meeting of the Board of Trustees, and the Meeting of the Audit Committee (video)

23. Executive Session – In accordance with Section 551.072, Texas Government Code, the Board of Trustees will meet in executive session to deliberate the purchase, exchange, lease or value of real property and the ERS building. Thereafter, the Board may consider appropriate action in open session. (video)

24. ADJOURNMENT OF THE BOARD OF TRUSTEES

* We are accredited by the State Pension Review Board (PRB) as a Minimum Educational Training (MET) sponsor for Texas public retirement systems. This accreditation does not constitute an endorsement by the PRB as to the quality of our MET program. These agenda items may be considered in-house training provided by ERS to board trustees and the system administrator for purposes of fulfilling the MET program requirements. ERS is an accredited sponsor of MET for its system administrator and trustees.

NOTES:
1. Persons with disabilities who plan to attend this meeting and who may need special assistance are requested to contact Kelley Davenport at (512) 867-7772 three to five (3-5) working days prior to the meeting date so that appropriate arrangements can be made.
2. The Employees Retirement System of Texas Joint Meeting of the Board of Trustees and Investment Advisory Committee is scheduled to meet from 8:00 a.m. to approximately 4:45 p.m. on Thursday, December 1, 2016. The Board of Trustees will convene as a committee of the whole on Friday, December 2, 2016 to take up Audit and Board agenda items from approximately 8:00 a.m. to 4:00 p.m. but may hear those items before or after the anticipated time frame. Meetings are tentatively scheduled to follow each other consecutively, but they may start earlier or later than the posted time depending on the length of the discussions within each agenda item and meeting and other circumstances not presently anticipated. Please note that the estimated times and sequence of agenda items are only approximate, and the time reflected in the posted agenda item, order of meetings or agenda items may be moved or adjusted as necessary.

> Meeting materials
> Complete presentation

Joint Meeting of the ERS Board of Trustees and Investment Advisory Committee

1. Review and Approval of the Minutes to the August 16, 2016 Joint Meeting of the Board of Trustees and Investment Advisory Committee (video)

2. Review and Discussion of ERS’ Asset Allocation Study:
a. Featured Speaker Michael Hood on Asset Allocation (video)
b. Presentation of Risk Survey Results (video)
c. Capital Market Assumptions (video)

3. * Discussion and Training Regarding Ethics and Fiduciary Responsibility (video)

4. * Review and Discussion of ERS Retirement Plans and Actuarial Valuation Reports for Funding as of August 31, 2016 (video)

5. * Review and Discussion of the Investment Performance of the System’s Assets:
a. Fiscal Year 2016 Investment Performance (video)
b. Fiscal Year 2016 Global Investment Performance Standards Report  (video)
c. Third Calendar Quarter of 2016 Investment Performance (video)

6. * Review and Discussion of the Risk Management and Applied Research Program (video)

7. Review, Discussion and Consideration of ERS’ Emerging Manager Program (video)

8. Chief Investment Officer’s Report (video)

9. ADJOURNMENT OF THE JOINT MEETING OF THE BOARD OF TRUSTEES AND THE INVESTMENT ADVISORY COMMITTEE AND RECESS OF THE BOARD OF TRUSTEES – The Board of Trustees will reconvene as a Committee of the whole on Friday, December 2, 2016 at 8:00 a.m. to consider Audit and Board agenda items. (video)

Meeting of the ERS Board of Trustees Audit Committee

10. Review and Approval of the Minutes to the August 16, 2016 ERS Audit Committee Meeting (video)

11. Presentation, Discussion and Consideration of Audit Committee Agenda Items:
a. Internal Audit Reports (video)
b. Internal Audit Administrative Items (video)

12. ADJOURNMENT OF THE ERS BOARD OF TRUSTEES AUDIT COMMITTEE – Following adjournment of the ERS Audit Committee, the Board of Trustees will take up the remaining agenda items. (video)

Meeting of the ERS Board of Trustees

13. Review and Approval of the Minutes to the August 16, 2016 meeting of the Board of Trustees (video)

14. Executive Session – In accordance with section 551.074, Texas Government Code, the Board of Trustees will meet in executive session to evaluate the duties, performance and compensation of the Internal Auditor of the Employees Retirement System of Texas. Thereafter the Board may consider appropriate action in open session. (video)

15. Review, Discussion and Selection of the Third-Party Administrator for HealthSelectSM of Texas, Including Consumer Directed HealthSelectSM (video)

16. Review and Discussion of the Deferred Compensation Program Texa$aver 401(k) and 457 Plans and Monitoring Strategy Overview (video)

17. Review, Discussion and Consideration of the Texas Employees Group Benefits Program:
a. Health Insurance Financial Status Update for Fiscal Year 2016 and Outlook for Fiscal Year 2017 (video)
b. GBP Medicare Plans and Monitoring Strategy Overview (video)
c. Dental Insurance Plans and Monitoring Strategy Overview (video)
d. Basic and Optional Term Life, Accidental Death and Dismemberment Plans Monitoring Strategy Overview (video)
e. Group Vision Care Program and Monitoring Strategy Overview (video)
f. Disability Plans and Monitoring Strategy Overview (video)

18. Review and Discussion of the Texas Employees Group Benefits Program: TexFlex Program and Monitoring Strategy Overview (video)

19. Review, Discussion and Consideration of the Texas Employees Group Benefits Program: Actuarial Valuation of Retiree Health Insurance Benefits as of August 31, 2016 (video)

20. Review, Discussion and Consideration of Reappointment of ERS Investment Advisory Committee Member with Term Expiring December 31, 2016 (video)

21. Executive Director Agency Update (video)

22. Set 2017 Meeting Dates for the Joint Meeting of the ERS Board of Trustees and Investment Advisory Committee, the Meeting of the Board of Trustees, and the Meeting of the Audit Committee (video)

23. Executive Session – In accordance with Section 551.072, Texas Government Code, the Board of Trustees will meet in executive session to deliberate the purchase, exchange, lease or value of real property and the ERS building. Thereafter, the Board may consider appropriate action in open session. (video)

24. ADJOURNMENT OF THE BOARD OF TRUSTEES

* We are accredited by the State Pension Review Board (PRB) as a Minimum Educational Training (MET) sponsor for Texas public retirement systems. This accreditation does not constitute an endorsement by the PRB as to the quality of our MET program. These agenda items may be considered in-house training provided by ERS to board trustees and the system administrator for purposes of fulfilling the MET program requirements. ERS is an accredited sponsor of MET for its system administrator and trustees.

NOTES:
1. Persons with disabilities who plan to attend this meeting and who may need special assistance are requested to contact Kelley Davenport at (512) 867-7772 three to five (3-5) working days prior to the meeting date so that appropriate arrangements can be made.
2. The Employees Retirement System of Texas Joint Meeting of the Board of Trustees and Investment Advisory Committee is scheduled to meet from 8:00 a.m. to approximately 4:45 p.m. on Thursday, December 1, 2016. The Board of Trustees will convene as a committee of the whole on Friday, December 2, 2016 to take up Audit and Board agenda items from approximately 8:00 a.m. to 4:00 p.m. but may hear those items before or after the anticipated time frame. Meetings are tentatively scheduled to follow each other consecutively, but they may start earlier or later than the posted time depending on the length of the discussions within each agenda item and meeting and other circumstances not presently anticipated. Please note that the estimated times and sequence of agenda items are only approximate, and the time reflected in the posted agenda item, order of meetings or agenda items may be moved or adjusted as necessary.