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BOARD OF TRUSTEES
SPECIAL MEETING
November 15, 2017
MEETING DOCUMENTS
TEACHERS’ RETIREMENT SYSTEM OF OKLAHOMA Special Board Meeting
Tuesday, November 15, 2017 – 9:00 AM TRS Administration Board Room
2500 N. Lincoln Blvd., 5th Floor, Oklahoma City, OK
AGENDA
1. ROLL CALL FOR QUORUM
2. DISCUSSION AND POSSIBLE ACTION ON APPROVAL OF MINUTES:October 25, 2017, Board of Trustees Regular Meeting (Page 3)
3. PRESENTATION BY INTERNAL AUDIT ASSURANCE RFP (RFP #18-1001) CANDIDATESA. BKD, LLP B. Clifton Larson Allen, LLP
4. DISCUSSION AND POSSIBLE ACTION TO SELECT AN INTERNAL AUDIT ASSURANCE FIRM
5. DISCUSSION AND POSSIBLE ACTION ON COMMITTEE REPORTS:A. Governance:
DISCUSSION AND POSSIBLE ACTION TO AMEND BOARD OF TRUSTEES POLICY MANUAL – CHAPTER 11 – SECURITIES FRAUD LITIGATION POLICY (Page 13)
B. Audit
6. DISCUSSION AND POSSIBLE ACTION TO NAME FINALISTS FOR INTERVIEW FOR INTERNAL AUDIT PROCESS/CONSULTING RFP (#18-1002) (Page 16)
7. DISCUSSION AND POSSIBLE ACTION ON EMPLOYER LATE FEE WAIVER REQUESTS(Page 21)
A. Castoosa Public Schools B. Hulbert Public Schools
8. DISCUSSION AND POSSIBLE ACTION ON 2018 LEGISLATION (Page 24)
9. DISCUSSION AND POSSIBLE ACTION ON DISABILITY RETIREMENTS (70 O.S. § 17-105(5))(Page 41)
10. DISCUSSION AND POSSIBLE ACTION TO RESOLVE INTO EXECUTIVE SESSIONPURSUANT TO 25 O.S. § 307(B)(3) FOR THE PURPOSE OF DISCUSSING THE PURCHASE ORAPPRAISAL OF REAL PROPERTY
a. Vote to Convene into Executive Sessionb. Vote to Return to Open Session
11. DISCUSSION AND POSSIBLE ACTION TO RESOLVE INTO EXECUTIVE SESSION PURSUANTTO 25 O.S. § 307(B)(3) FOR THE PURPOSE OF DISCUSSING THE EMPLOYMENT, JOB DUTIES,EVALUATION, COMPENSATION, HIRING, APPOINTMENT, PROMOTION, DEMOTION,DISCIPLINING, TERMINATION, OR RESIGNATION OF THE GENERAL COUNSEL
a. Vote to Convene into Executive Sessionb. Vote to Return to Open Session
12. DISCUSSION AND POSSIBLE ACTION ON ITEMS DISCUSSED IN EXECUTIVE SESSION
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13. DISCUSSION AND POSSIBLE ACTION TO APPROVE PLAN FOR SELECTION OF GENERALCOUNSEL
14. DISCUSSION AND POSSIBLE ACTION TO AMEND AGREEMENT WITH PHILLIPS MURRAHMURRAH FOR ADDITIONAL LEGAL SERVICES
15. QUESTIONS AND COMMENTS FROM TRUSTEES
16. ADJOURNMENT
Next meeting: Board Regular Meeting 12 p.m. Wednesday, December 6, 2017
Note: The Board of Trustees may discuss, vote to approve, vote to disapprove, or decide not to discuss any item on the agenda.
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MEETING MINUTES OCTOBER 25, 2017
BOARD OF TRUSTEES REGULAR MEETING TEACHERS’ RETIREMENT SYSTEM OF OKLAHOMA
The regularly scheduled meeting of the Board of Trustees of the Teachers’ Retirement System of Oklahoma was called to order by Gary Trennepohl, Chairman, at 12:15 p.m., in the Administration Board Room, 5th Floor, Oliver Hodge Education Building, 2500 N. Lincoln Blvd., Oklahoma City, OK. The meeting notice and agenda were posted in accordance with 25 O.S. Section 311(A)(11).
TRUSTEES PRESENT: Gary Trennepohl, Chairman Vernon Florence, Vice-Chairman Judie Harris, Secretary Roger Gaddis Christa Hughes
David Kinney *Ken MillerBill Peacher Myron Pope Greg Winters
TRUSTEES ABSENT: Elaine Dodd Jill Geiger Shareé Madsen Kevin Moore
TRS STAFF PRESENT: Tom Spencer, Executive Director Julie Ezell, Dep. Dir. Admin./Gen.Counsel John Santos, Deputy Director of Operations Dixie Moody, Director of Client Services
Kim Bold, Human Resources Director Kirk Stebbins, Chief Investment Officer David Tinker, Business Analyst Phyllis Bennett, Executive Assistant
OTHERS PRESENT: Doug Anderson, AndCo Consulting Peter Brown, AndCo Consulting Ryan Falls, Gabriel, Roeder, Smith & Co. Vanessa Dutton, Eide Bailly Hilaire Johnson, Stinnett & Associates
John Turner, Stinnett & Associates Sabra Tucker, OREA Bill Bentley, APOE Kris Masterman
*Denotes late arrival or early departure
ITEM 1 – ROLL CALL FOR QUORUM: Chairman Trennepohl asked the recording secretary to call roll to determine if a quorum was present. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters. A quorum was present.
Mr. Miller arrived at 12:19 p.m.
ITEM 2 – DISCUSSION AND POSSIBLE ACTION ON APPROVAL OF MINUTES: A motion made by Mr. Florence with a second made by Dr. Winters to approve the September 21, 2017, Board of Trustees Rescheduled Meeting minutes carried by a unanimous voice vote. Trustees responding were Mr.
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Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
ITEM 3 – DISCUSSION AND POSSIBLE ACTION ON FY 2017 ACTUARIAL REPORT: Ryan Falls of Gabriel, Roeder, Smith & Co., reviewed TRS’ Actuarial Valuation as of June 30, 2017. The bound reports were distributed to Trustees prior to the meeting. The funded ratio is 70.4% based on the actuarial value of assets, the highest it has ever been for TRS. Mr. Falls highlighted accounting changes prompted by OPEB (Postemployment Benefit Plans Other than Pension Plans) and some figures related to membership. There was a slight decrease in active members over the last 10 years; the average pay for active members decreased 0.7%; the average age of active members is 46 years and the average service for active member is 11.1 years. There was some discussion on how the figures have evolved over time.
A motion made by Dr. Winters with a second made by Mr. Peacher to accept the FY 2017 Actuarial Report carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
ITEM 4 – INVESTMENT CONSULTANT MONTHLY AND QUARTERLY REPORTS AND 403(B) QUARTERLY REPORT: Investment consultants to the Board, Doug Anderson and Peter Brown of AndCo Consulting, presented TRS’ monthly and quarterly reports for the period ending September 2017. TRS’ total fund market value of $15.8B as of September 30 has increased to above $16B. Returns were 7.08% for 10 years, 10.66% for five years, 7.22% for three years, 14.07% for one year, 11.69% YTD, 3.76% for the quarter and 1.95% for the month. Mr. Anderson said these amounts, which are above benchmarks and actuarial assumptions, are due to good performances in domestic and international equity funds. He reviewed rankings of TRS’ fund versus all public plans, and returns made in various portfolios.
Mr. Anderson reviewed TRS 403(b) Plan for the quarter ending September 30, 2017, and shared the following observations: Assets increased more than $2M; there were returns for all options; almost 88% of assets are invested in target date funds, most of that is invested in the Voya Index Solution Fund; fees are reasonable and consistent with the level of assets. AndCo Consulting’s Paul Murray is working to lower TRS’ cost of the plan.
ITEM 5 – DISCUSSION AND POSSIBLE ACTION ON INVESTMENT COMMITTEE REPORT: Investment Committee Chairman Roger Gaddis items that were discussed and/or acted on in this morning’s meeting.
A. DISCUSSION AND POSSIBLE ACTION ON MANAGER STATUS REPORT: Mr. Anderson described the condition of Shapiro Capital Management’s portfolio since it was acquired by American Beacon and recommended its status be upgraded from “On Alert” to “In Compliance”.
A motion out of the Investment Committee to move Shapiro Capital Management from “on alert” to “in compliance” status carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
B. DISCUSSION AND POSSIBLE ACTION TO SELECT INDEX MANAGER: Mr. Gaddis briefed Trustees about yesterday’s presentations by BlackRock, Northern Trust and RhumbLine, the three firms that were Index Manager RFP candidates. He said staff and investment consultants recommended hiring Northern Trust to manage TRS’ Index Fund, the Russell 1000, and Smart Beta.
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A motion out of the Investment Committee to approve hiring Northern Trust as TRS’ Index Manager carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
C. DISCUSSION AND POSSIBLE ACTION ON U.S. EQUITY STRUCTURE RECOMMENDATION: TRS Chief Investment Officer Kirk Stebbins said the U.S. Equity structure review began in 2016 and he presented his recommendation.
A motion out of the Investment Committee to adopt staff recommendation on U.S. Equity Structure (10% cap weighted index [Russell 1000], 15% factor index [Scientific Beta US High Factor Exposure MBMS Six Factor Equal Weight Index] and 75% traditional active, to utilize Northern Trust as transition manager with timing of the transition to be determined by staff carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
D. TO APPROVE INVESTMENT MANAGEMENT AGREEMENT WITH EPOCH INVESTMENT PARTNERS, INC. CHICKASAW CAPITAL: TRS General Counsel/Deputy Director of Administration Julie Ezell said these two management agreements are part of her ongoing project to standardize investment management contracts.
A motion out of the Investment Committee to approve investment manager agreements with Epoch Investment Partner, Inc. and Chickasaw Capital Management LLC carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
E. DISCUSSION AND POSSIBLE ACTION ON SECURITIES LENDING COLLATERAL GUIDELINES: TRS Executive Director Tom Spencer presented a memorandum outlining his and Mr. Stebbins’ recommended amendments to investment guidelines for Northern Trust’s securities lending program to permit additional collateral reinvestment types and to amend the maturity and/or percentage holdings limitations to existing collateral. Suggested amendments include allowing overnight bank time deposits; removing the allocation percent limits on CDs and commercial paper; increasing the maturity limit for CDs and Commercial Paper from 180 days to 13 months; and increasing from 10% to 25% the per repurchase agreement counterparty limit for government backed repurchase agreements.
A motion out of the Investment Committee to amend Northern Trust’s securities lending collateral guidelines as recommended by staff carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
F. DISCUSSION AND POSSIBLE ACTION TO APPROVE CURRENCY HEDGE GUIDELINE REQUEST FROM CAUSEWAY: Mr. Gaddis said that after a thorough discussion by the Investment Committee it was agreed to table this item so staff and investment consultants can do more research.
G. DISCUSSION AND POSSIBLE ACTION TO ISSUE RFP FOR COMMERCIAL REAL ESTATE APPRAISER: Ms. Ezell said as TRS considers purchasing an office building for investment and potential occupancy purposes, a commercial real estate appraiser would help the Board arrive at an appropriate value of a property. The cost could be between $4,500 and $6,500. Senior staff will review responses to the RFP, interview finalists, and make a recommendation at the December Board meeting.
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A motion out of the Investment Committee to issue an RFP for a commercial real estate appraiser carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
H. DISCUSSION ON CHIEF INVESTMENT REPORTS: Mr. Stebbins reviewed a couple of projects that have been completed and said the next project will be U.S. Fixed Income structure. He will be looking at whether there should still be a strategic allocation to high yield, or should some or all of that decision be delegated to one of our fixed income managers.
No action was necessary.
Item 6 was taken out of sequence.
ITEM 7 – DISCUSSION AND POSSIBLE ACTION ON COMMITTEE REPORTS: A. Governance: Ms. Ezell is working on a policy update that will be presented at the November meeting.
B. Audit: DISCUSSION AND POSSIBLE ACTION TO APPROVE CLIENT SERVICES RETIREMENT RECONCILIATION AUDIT REPORT BY STINNETT & ASSOCIATES: Audit Committee chairman Dr. Greg Winters reported that the Stinnett & Associates completed its reviews of Accounting/Financial and Human Resources and Leave Usage. Their Investment Operations review will come next week and the Call Center review will start soon. The Client Services Reconciliation Review will be presented by Stinnett & Associates later in this meeting.
Mr. Peacher asked about the ad hoc committee on the acquisition of Board Meeting Technology. Mr. Spencer said a conference call will be scheduled when the assigned members are available.
ITEM 8 – DISCUSSION AND POSSIBLE ACTION TO NAME FINALISTS FOR INTERVIEW FOR INTERNAL AUDIT ASSURANCE RFP (RFP #18-0001): Ms. Ezell said TRS received three responses from the RFP issued August 25. She presented a memorandum with staff recommendations and a table summarizing all responses.
A motion made by Dr. Winters with a second made by Ms. Harris to recommend that BKD, LLP, and Clifton Larson Allen, LLP, be named finalists and interview with the Board at the November meeting carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
ITEM 9 – DISCUSSION AND POSSIBLE ACTION ON ELIGIBILITY OF AND NOTIFICATION TO RETIRED EDUCATOR’S ASSOCIATION REGARDING APPOINTMENT OF NON-VOTING TRUSTEE: Ms. Ezell said there is a statute that puts on TRS’ Board a non-voting trustee that is appointed by a retired educators association. There is more than one retired educators association so in 2014 rules were adopted to determine which association makes the appointment for the upcoming year. RPOE is next to make the Trustee appointment for CY 2018 and they appointed Bill Bentley to rejoin the Board in January.
A motion made by Mr. Peacher with a second made by Dr. Winters to notify RPOE that they get to appoint a non-voting Trustee for CY 2018 carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
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ITEM 10 – DISCUSSION AND POSSIBLE ACTION ON PROPOSED SCHEDULE FOR 2018 BOARD OF TRUSTEES MEETINGS: Trustees reviewed dates proposed for 2018 Board meetings and were reminded that July and November meetings are in place to assure that disability retirements will be reviewed and approved by the Board each month.
A motion made by Dr. Pope with a second made by Mr. Florence to approve the proposed schedule of 2018 Board meeting dates carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
ITEM 11 – DISCUSSION AND POSSIBLE ACTION ON EMPLOYER LATE FEE WAIVER REQUESTS: Ms. Ezell presented correspondence from schools requesting late fee waivers and gave her recommendations for each.
A. Amber-Pocasset Public Schools (Decline) B. Bokoshe Public Schools (Decline) C. Bray-Doyle Public School (Decline) D. Lomega Public Schools Madill Public Schools (Accept) E. Madill Public Schools (Decline) F. Office of Management and Enterprise Services (Decline) G. University of Central Oklahoma (Decline)
A motion made by Mr. Peacher with a second made by Mr. Gaddis to accept recommendations of staff on the employer late fee waiver requests carried by a majority voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Trennepohl and Dr. Winters. Dr. Pope abstained.
ITEM 12 – INITIAL DISCUSSION ON FY 2019 BUDGET: Mr. Spencer said TRS is a non-appropriated agency and is not required to present an actual proposed budget to the Office of Management and Enterprise Services any longer. He reviewed a document summarizing the current environmental assessment, general agency goals and FY 2019 budget ideas. Payroll could increase $50K due to promotions, market increases, changes in duties, etc.); Investment Consultant contract will increase $32,815.80 due to an increase built in for FY 2019; Audit Services (combined) could increase $162K; Actuarial will increase $1,300 as part of a multi-year contract; Legal Services could increase $50K after an RFP produces a law firm that specializes in contracts with private market investment managers; Medical Board hearing expense could increase $5K due to one or two independent reviews; Professional Services could increase $25K due to more programming for rule changes and requested enhancements from MY Consulting; and Equipment (including software) could increase $22K with new software for Board meeting management. The overall increase for FY 2019 could be $347,141. The final budget will be presented to the Board in May 2018. Mr. Spencer shared a document that compared portfolio amounts, and membership and staff sizes of several other state pension plans.
No action was necessary.
The item below was presented out of sequence
ITEM 6 – DISCUSSION AND POSSIBLE ACTION TO APPROVE THE AUDITED FINANCIAL STATEMENTS FOR FY 2017: Vanessa Dutton of Eide Bailly LLP, CPA & Business Advisors, presented TRS’ financial statement as of and for the year ended June 30, 2017. While reviewing the report and the accompanying letter she shared a few observations: A lot of differences this year are GASB 74’s requirements to account for payments TRS makes to the postemployment benefit plans (OPEB); the number of retirees is
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going up while the number of contributions is coming down, but TRS plans combined had an increase in net position of $1.6B, largely due to better investment results; and there are no findings to bring to the attention of the Board.
A motion made by Dr. Winters with a second made by Mr. Kinney to approve the Audited Financial Statements for FY 2017 as presented carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
The item below is a continuation from earlier in this meeting.
ITEM 7 B – Audit Committee Report (CONTINUED): DISCUSSION AND POSSIBLE ACTION TO APPROVE CLIENT SERVICES RETIREMENT RECONCILIATION AUDIT REPORT BY STINNETT & ASSOCIATES: John Turner and Hilaire Johnson of Stinnett & Associates presented their Client Services Reconciliation Review to Management. Ms. Johnson addressed opportunities for improvement related to member account reconciliation and member notifications, and management’s responses to fix the issues.
A motion made by Mr. Florence with a second made by Mr. Peacher to accept the Client Services Retirement Reconciliation Audit as presented carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
ITEM 13 – DISCUSSION AND POSSIBLE ACTION TO ADOPT 2018 LEGISLATIVE PROPOSALS: Mr. Spencer presented his memorandum outlining legislative changes suggested by TRS senior management. They include winding down the TRS 403(b) plan; clarifying the “wear away” for past employees in higher education; removing the requirement for Board action on disability retirements that are approved by the medical board; making a 90-day filing deadline for retirement; and removing the confusion regarding the post-retirement earnings limit for members under the age of 62.
A motion made by Dr. Winters with a second made by Dr. Pope to adopt 2018 legislative proposals carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
ITEM 14 – DISCUSSION AND POSSIBLE ACTION ON AGENCY REPORTS: A. Client Services: TRS Director of Client Services Dixie Moody presented performance metrics through
September 2017: TRS received around 450 new benefit estimate requests in September. Of the 5,771 calls to the Information Center received through TRS’ main line, 81% were answered by an agent; 16% were routed through menu options; and 3% abandoned their call within 10 seconds while waiting for an agent. TRS received 446 incoming emails in September. There are now 15,763 portal clients. Of the 159 clients who applied for a November 1 retirement, five were disability retirements. Three of the disability retirements were approved by TRS’ medical board and two by the Social Security Administration.
a. Approval of disability retirements (70 O.S. § 17-105(5)):
A motion made by Mr. Peacher with a second made by Mr. Florence to approve the disability retirements from October 1 to October 31, 2017, carried by a unanimous voice vote. Trustees
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responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
B. Human Resources: TRS Human Resources Director Kim Bold’s HR Status Report for October 25 reflected one new hire effective September 18, a Financial Accountant (receipting), and one resignation effective September 30, an Investment Analyst. There were no promotions, transfers, or changes, and no severance payments in September. To be included on the November report is the October 5 resignation of a Retirement Planning Consultant (reconciliations). Interviews are going on for a client services positions in reconciliation, survivor benefits and the information center. Mr. Stebbins updated the job description of the investment analyst position which will be posted upon approval by the cabinet secretary.
C. Finance: Business Analyst David Tinker presented the analysis of employee and employer contributions received for the two months ended August 31. At this time, there is only one outstanding employer report.
Mr. Spencer presented the September 2017 financial reports on behalf of TRS Director of Finance/CFO Sam Moore who is attending a conference. The Balance Sheet showed $15.9B though assets peaked over $16B briefly during the month. The Statement of Revenues, Expenditures and Changes for the Three Months Ended September 30 showed member deposits and employers contributions down due to there being fewer actives paying resulting in less from the school and the member. Lottery Revenue is up 153.93% compared to this time last year. Under Disbursements, withdrawals are up 21.16% which is probably due to people leaving teaching and taking their money out. On the Comparison of Actual Expenditures FY 2017 and FY 2018 for the three months ended September 30, timing issues were the cause of large decreases in Investment Consultant, Actuarial Services, and Rent and Maintenance. On the Comparison of FY 2018 Budget to Actual Expenses for the three months ended September 30 the Postage and Printing and Binding Contracts were under due to the timing of billing for the agency newsletter. The Claims of Authorized Expenditures were reviewed without comment.
D. General Counsel/Deputy Director of Administration: Ms. Ezell updated Trustees on some issues she worked on since the last Board meeting:
• The grievance hearing that had been rescheduled twice was held October 5. Findings will bepresented to the Board in either February or March.
• The Real Estate allocation documentation for Starwood is complete and she is reviewing Duneand Green Oak documents so they will be ready if the Board votes in December to makeallocations to their new funds.
• She is about half way through her project of standardizing manager agreement documents.• She spent a good bit of time working on RFPs. The RFP for Internal Audit for Consulting
Process Audits closes in a week or two so another memo will be presented to the Board at itsNovember meeting.
• She and senior management are looking at administrative rules to see if any changes need to beproposed for the 2018.
• Ms. Ezell followed up with the management company of Blended Epic Charter School after theBoard held the school’s application for TRS participation in abeyance due to it having late fees,late filings and not contributing on some employees. Epic has not responded and if they do notdo so in a reasonable time, she will discuss with the Board how to proceed.
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There was discussion on the MFN designations in fund manager agreements. The managers could be asked to file an affirmative statement. The process will be looked into at firms that manage other pension funds.
E. Executive Director: Mr. Spencer presented highlights of some of his activities from September 21 through October 24.
• Audits: Of the two internal audit RFPs, recommendations were made today on one and staff willhave a recommendation on the other one by the November meeting. Stinnett & Associates’report covering HR/Payroll could be presented to the board at the November meeting. EideBailly presented its external audit earlier than usual.
• Board Policy: Worked with Ms. Ezell to comply with TRS’ “Insider Trading” Policy.
• Communication/Education: Attended the Fall Pension Conference in Sulphur, Oklahoma, in lateSeptember. It had several good sessions, including a two-hour session on cyber security and Mr.Spencer enjoyed spending time with the Trustees and staff who attended.
• Actuarial: Assisted with input and wording related to the OPEB policy, as well as reviewed theactuarial valuation along with Ms. Ezell and others and gave the actuarial consulting firm someproposed edits to the final report.
• Human Resources: Worked with Ms. Bold and other supervisors on several agency vacancies.Completed all but one performance evaluation of direct reports.
• Legal/Client complaints: Fielded a grievance through Sen. Jim Inhofe’s Tulsa office. The client,a recent retiree, was a bit confused about pensions and withdrawals. She had complained to theSenator’s office that she had received no funds from TRS. However, the substantial withdrawalshe had requested was already in her account.
• Investments: Met with Ms. Ezell and Mr. Stebbins to come up with a written policy regardingreal estate and private investment manager “follow on funds.” More specifics will be available inthe near future. Also met with Mr. Stebbins and Investment Consultants at AndCo regardingamending securities lending guidelines.
• Legislation: Attended an interim study on the budgets of some select non-appropriated agenciesbefore the Rules Committee. Rep. Randy McDaniel will have his annual meeting on November8 for the pension systems to give an update on investment performance and actuarial condition.
12. QUESTIONS AND COMMENTS FROM TRUSTEES: Chairman Trennepohl pointed out that thenext meeting will be a Special Board Meeting November 15, and no Investment Committee. After some discussion it was decided to convene the November Special Board Meeting at 9 a.m.
13. NEW BUSINESS (Any matter not known about or which could not have been reasonably foreseenprior to the time of posting. 25 O.S. 2011, §311.) There was no new business.
14. ADJOURNMENT:
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A motion made by Mr. Florence with a second made by Dr. Pope to adjourn the meeting at 3 p.m. was carried by a unanimous voice vote. Trustees responding were Mr. Florence, Mr. Gaddis, Ms. Harris, Ms. Hughes, Mr. Kinney, Mr. Miller, Mr. Peacher, Dr. Pope, Dr. Trennepohl and Dr. Winters.
BOARD OF TRUSTEES, TEACHERS’ RETIREMENT SYSTEM OF OKLAHOMA
By: ________________________________________ Gary Trennepohl, Chairman
ATTEST:
BY: ________________________________________ Judie Harris, Secretary
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Chapter 11 – Securities Fraud Litigation Policy
Purpose
This policy establishes guidelines for monitoring and participating in class action securities litigation. The Board of Trustees (the “Board”) of the Oklahoma Teachers Retirement System (the “System”) recognizes the importance of appropriate monitoring of and/or participation in class action securities litigation in fulfilling its constitutional and statutory fiduciary duty to administer the retirement system for the exclusive benefit of the Clients and their beneficiaries.
As an institutional investor, the System may, from time to time, suffer losses caused by alleged violations of federal and state securities laws relating to fraud, disclosure obligations and/or breaches of fiduciary or other duties. In cases where a class action lawsuit is filed to recover damages for violations of securities and other laws, the System may have the opportunity to participate in the litigation. This policy provides guidelines for monitoring litigation and for determining the appropriate participation by the System.
This Class Action Securities Litigation Policy is intended to be applied and interpreted in compliance with applicable law and in harmony with the mission statement, policies and guidelines of the System as approved by the Board from time to time.
Guidelines
Monitoring Class Action Filings
The System shall monitor the filing and settlement of securities class actions to determine whether the System may be a class member in any such litigation. Monitoring may be done by staff, the custodian, by retaining one or more law firms and/or a securities litigation consultant. Staff shall make a determination of the System’s level of interest in the litigation, based on its own monitoring, or based on a recommendation from a firm or service that is monitoring securities litigation on the System’s behalf.
System staff, working with the custodian, outside counsel and/or securities litigation consultant, will monitor pending cases where the System is a member of the class, file appropriate paperwork as required, and evaluate proposed settlements. To the extent that staff finds a proposed settlement inadequate to the interests of the System, staff shall make a recommendation to the Board to file legal objections.
Staff shall report to the Board, at least annually, on new class action litigation, pending class action claims, and litigation resolved or closed since the previous report, including the dollar amount of settlements received during the year.
Active Class Monitoring
Where the potential amount the System could recover in a case is sufficiently large and the case has merit, staff shall determine whether the System should actively participate in the litigation. In doing so, the System shall weigh the materiality of the potential financial loss that gave rise to
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the litigation against the expected costs and benefits of the litigation options available. The litigation options generally are:
• Monitor litigation as a member of the class.
• Monitor litigation as a member of the class, but object to an unreasonable settlement.
• Participate as lead plaintiff of the class or co-lead plaintiff with one or more otherinvestors.
• Pursue separate legal action apart from the class.
Three tests may be considered when determining a course of action. An affirmative response to all questions could result in a recommendation to the Board to pursue either lead or co-lead plaintiff status, or a separate legal action apart from the class. From a general perspective, a negative response to any of the three individual questions will likely result in the System assuming a passive role in the class action suit:
Test:
1. Does the potential financial loss to the System that gave rise to the litigation exceed 5million dollars?
2. Does the System have a superior legal basis for serving as lead plaintiff compared toother institutional holders?
3. Does the expected benefit from assuming lead plaintiff status, or pursuing a separate legalaction, materially outweigh the benefit of participating as a passive member of the classand adequately compensate the System for the risks and costs incurred?
The System will, with the assistance of portfolio monitoring firm or service, review all class action litigation to establish whether the System is a member of the class. Where the potential financial loss is less than 5 million dollars, the System will become a member of the class, file appropriate paperwork to establish a claim, and monitor the litigation.
For each case where the potential financial loss is 5 million dollars or greater, System staff will prepare a summary report of the research performed by the firm or service that is monitoring securities litigation consistent with the established tests. A recommendation to the Board to pursue lead plaintiff status, co-lead plaintiff status, or a separate legal action will include a detailed analysis of expected costs and benefits, an analysis of the size of the System’s holding relative to other investors, and other supporting rationale. The Board’s decision to seek lead plaintiff status will be based upon the totality of the circumstances. The referenced dollar loss thresholds are guidelines and not intended to be the sole factor in any such determination. As an integral part of this review process, the System may retain one or more law firms to review the matter. The firm shall report its findings to the System with a written recommendation as to whether or not the System should actively monitor the case, seek lead plaintiff status, seek co-lead plaintiff status, or pursue separate legal action. When the Board determines that the System
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should seek designation as lead plaintiff, co-lead plaintiff, or opt out of a class action, the System shall appoint special counsel to the matter.
If the System determines not to participate in the litigation, active monitoring of the litigation may include regular reports from counsel to staff regarding the status of a case, settlement discussions and/or the proceedings.
Where the potential recovery is not significant, the staff shall monitor the litigation to take the steps necessary to insure that the System will share in any recovery.
Participation in Settlement
Staff shall develop and implement procedures for ensuring the timely submission of claims on behalf of the System in all appropriate securities class action settlements.
Reports to Board
Staff shall report to the Board as necessary, but at least semi-annually, to keep the Board fully informed of those cases that are being monitored or in which the System is actively participating. Staff shall keep the Board apprised of any unusual or extraordinary events as they occur.
Retention of Outside Counsel
The Board may retain one or more consultants to serve as Securities Monitoring and Litigation Counsel (Counsel), monitoring consultant, or in another capacity, as necessary to advise and/or represent the System in class action securities litigation matters. When the Board determines that the System should seek designation as lead plaintiff, co-lead plaintiff, or opt out of a class action, the Board shall appoint special counsel to the matter. In instances where the Board has a Portfolio Monitoring Agreement with the appointed law firm, a separate contract shall be executed specific to the litigation.
15
M E M O R A N D U M
TO: TRS Board of Trustees and Audit Committee
FROM: TRS Staff (Tom Spencer, Julie Ezell, John Santos, Sam Moore, and Lisa Van Liew)
DATE: November 9, 2017
RE: Internal Audit Process/Consulting Services RFP (715-18-1002) Analysis and
Recommendation
------------------------------------------------------------------------------------------------------------
The Board of Trustees of the Teachers’ Retirement System of Oklahoma issued an RFP for Internal Audit
Process/Consulting Services on September 22, 2017. Responses from the following vendors were
received by the deadline of October 27, 2017:
BKD, LLP
Clifton Larson Allen, LLP
Crawford Associates, PC
Rubin Brown, LLP
Stinnett & Associates, LLC
Immediately following this memo is a spreadsheet summarizing the responses and total scores. There
were five (5) selection and evaluation criteria listed in the RFP. There were 100 total points possible.
The selection and evaluation criteria with corresponding possible points are as follows:
The firm’s ability to assess the needs of TRS in developing an internal audit plan and approach.
(15 points possible)
The firm’s approach to performing efficient and effective internal auditing procedures on a
contractual basis. (20 points possible)
The firm’s experience with and knowledge of organizations similar to TRS, including knowledge
of defined benefit plans and knowledge of the State of Oklahoma procedures that may relate to
TRS, such as purchasing and personnel. (20 points possible)
The professional qualifications of the firm and the individuals who would be assigned to the
engagement and the accessibility of those individuals to TRS on an on-going basis. (20 points
possible)
Fees quoted for performance of engagement. It is TRS’ intention to consider the fees in the
selection process based on competitive pricing and value added commensurate with costs. (25
points possible)
All five (5) of the proposals were from reputable firms. All of the firms have experience with auditing
pension plans, although only two have audited Oklahoma pension plans. The staff analyzed the firms as
follows:
BKD, LLP
BKD, LLP is a Springfield, MO based firm with offices in Oklahoma City. They have been in business
since 1923 and have clients in all 50 states. They have audited over 1,600 employee benefit plans and
have over 500 governmental clients. They have audited the Oklahoma Lottery and the Oklahoma
Commissioners of the Land Office, which means they should have a lot of familiarity with State of
16
Oklahoma financial and purchasing rules and laws. They have not previously audited an Oklahoma
public pension plan. They proposed a team of three people for this engagement, which was the smallest
team of all proposals. The proposed team is the same as they proposed on the Internal Audit Assurance
RFP. The engagement lead, Charlie Wright, is a CPA with 30 years of experience. The two people
working with him are less experienced CPAs one having 9 years of experience and one 5 years of
experience. Their response indicated that they might only provide limited access to their audit work
papers. If they are awarded a contract we will need to negotiate this issue with them.
BKD proposed an hourly blended fee beginning at $112 per hour in year one, with year 6 being $119 an
hour. Their fee proposal was the lowest of all bidders. Additionally, in their proposal they offered to
absorb 60 hours of Charlie Wright’s time in the first year, which is equal to a cost savings of $24,000.00.
Average score: 86.
Clifton Larson Allen, LLP
Clifton Larson Allen, LLP is headquartered in Baltimore, MD. They are the 9th largest CPA firm in the
United States with 3,600 total staff and 90 offices nationwide. The office assigned primarily for this
engagement is in Dallas, TX, with support from both the Baltimore, MD and Denver, CO offices. They
have no office in Oklahoma. The firm serves more than 1,900 government clients across the U.S. They
currently audit 18 governmental pension plans with assets in excess of $10 billion and over 20 plans
under $10 billion. They are currently providing services to the Oklahoma Turnpike Authority, and
audited the Oklahoma State Employees Group Insurance Board (now EGID) from 2011-2014. They have
not audited an Oklahoma public pension plan.
In their response they outlined six key risk domains that the evaluation committee found to demonstrate a
good understanding of the services desired. The proposed head of the engagement would be Jim Kreiser,
CISA, who has 20 years of experience. He appears to mainly have experience in process and IT audits.
The associate who will be doing most of the engagement work has 5 years’ experience, most of this with
employee benefit plans. The evaluation committee was concerned that all of the staff doing the audit
appeared to be based out of the Baltimore, MD office. Their response included a sample audit report
which the entire evaluation committee found very confusing. Their fee proposal was a blended fee of
$165 an hour in year 1, increasing to a high of $180 an hour in year 6. Average score: 70.
Crawford Associates, PC
Crawford Associates, PC is an Oklahoma City, Ok sole office firm that is well known in the Oklahoma
public pension and accounting world. The firm, founded in 1984, has 23 employees and exclusively
serves government clients. The firm has provided internal auditing services for Oklahoma Law
Enforcement Retirement System, Oklahoma Firefighters Pension and Retirement System as well as many
other state agencies. However, the services provided to OLERS and Firefighters is the type of services
covered by the “Assurance” Audit RFP.
The evaluation team was underwhelmed by Crawford’s description of the process they would employ to
perform a risk assessment and their RFP response in general. The engagement team they have proposed
consists of Chris Pembrook, CPA who has been with the firm since 2011. Prior to that he was with the
State Auditor’s Office and was the CFO for the Police pension system. Also proposed are Justin Kersy,
CPA who has 12 years of experience and Richard Rose, CPA with 17 years of experience. Their fee
proposal is a blended fee of $155 an hour for all six years. Average score: 74.
17
Rubin Brown, LLP
Rubin Brown, LLP has been in business since 1952 and is headquartered in St. Louis, MO. They have 5
offices nationwide and are the 46th largest firm in the U.S. They are proposing this engagement be
handled by their Kansas City, MO office. They have no current or past Oklahoma governmental clients.
The firm has a Benefit Plan Audit Services Group, although their response does not identify any pension
plan clients by name so the group was unsure if any of their pension clients are governmental. The risk
assessment and audit plan were both well defined in the proposal with a very structured timeline.
They proposed Rick Feldt, CPA as the lead on the engagement team. His background appeared to be
more financial and operation than internal audit, and he appears to be relatively new to his job at Rubin
Brown. Their proposed hourly rate was very confusing as for the first year it was a non-blended rate, but
then stated they would switch to a blended rate of $130 an hour in year two. The non-blended rate for
year 1 is as follows: Partner $300 per hour, Manager $175 per hour, In-charge $115 per hour, Staff $110.
Average score: 64.
Stinnett & Associates, LLC
Stinnett & Associates, LLC was founded in 2001 and has offices in Oklahoma City, Tulsa, and Dallas,
Houston, San Antonio, and Denver. They are proposing the engagement be handled from their Oklahoma
City office. The firm has approximately 65 certified staff with a range of professional certifications. The
proposed team will be led by John Turner, CIA who is a Principal with the firm. He has over 25 years’
experience in corporate accounting and internal audit. David Losacco, CPA, CIA, CISA who is also a
Principal will assist him. Rounding out the engagement team is Hilaire Johnson, ABCP with 20 years of
experience, Toan Nguyen, CIA, ABCP, Marci McCloskey, ABCP, Minhaj Rafik, Shantelle Harnsberry,
CPA, and Ashely Snow.
Other than currently providing internal auditing services for TRS, Stinnett audits no other state agencies
or public pensions (although they do audit some public higher-ed institutions). Their proposal technically
didn’t follow the RFP instructions in that it didn’t answer the specific questions in the order presented
(and they didn’t list what question they were answering) making a few of the answers harder to interpret.
The risk categories they defined related to the risk assessment was very thorough and demonstrates that
they have a good knowledge of TRS and its challenges. Their fee proposal is a blended hourly rate of
$113 per hour in the first year to a high of $116 in year six, plus expenses per year not to exceed
$3,000.00. Average Score: 79.
Staff Recommendation
In the opinion of staff, the Board should interview both BKD and Stinnett. BKD and Stinnett are both
proposing local teams. BKD has previous Oklahoma agency auditing experience. They have over 1,600
employee benefit plan clients. Their fees are the lowest of all respondents, and they scored the highest
average score of all respondents. Stinnett is a known quantity and has provided TRS with solid internal
auditing services. While they do not have experience auditing a pension system other than TRS, their
professional bench is deep and their fees are second lowest. Their total score was only 7 points behind
that of BKD. Staff is not recommending that CliftonLarsonAllen, Crawford Associates or Rubin Brown
be interviewed. All had higher (or ambiguous) fees. CliftonLarsonAllen and Rubin Brown were not
proposing local engagement teams which is a big draw-back to staff. While Crawford has strong public
pension and state agency experience their fees were the second highest, and their response was very short
18
and there is concern that the proposed team doesn’t have the experience in process and consulting audits
that TRS is seeking with this RFP.
19
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23
M E M O R A N D U M
TO: TRS Board of Trustees
FROM: Tom Spencer, Executive Director
DATE: November 9, 2017
RE: Legislative proposals for 2018 session -------------------------------------------------------------------------------------------------------------------------------------- This memo has an initial number of suggested legislative changes from TRS senior management to the Board. We hope to have an initial discussion at the October Board meeting and a final vote on possible legislation at the November board meeting.
1. Amend 70 O.S. §17-102.3 to make the provision of a 403(b) plan by TRS optional or take the authorityaway completely.
2. Amend 70 O.S. §17-105 dealing with Board approving disability retirements. Remove requirementsfor Board action on disability determinations unless Medical Board recommends denial. Staff would then have the authority to accept the Medical Board’s approval of a disability. Board will still get monthly statistics on the number of disability retirements.
3. Amend 70 O.S. §17-116.2C to clarify “wear away” for past employees in higher education. In theoriginal design of ESIP or the “wear away” provision for pension salary calculations, employers in higher education were given almost a full 1% less of an employer contribution on the premise that their employees would not be eligible for the wear away. An amendment was made a few years later that effectively wipes out the original intent if an employee in higher education finishes his or her career with as little as one year in common ed or career tech. The result is that TRS is being shorted for the pension cost of these individuals. TRS received a lower employer contribution rate for these members than from those whose career was entirely in common ed and career tech. Staff proposes that only the years in common ed and career tech can “worn away.”
4. Amend 70 O.S. § 17-116.10 to remove confusion regarding the post-retirement earnings limitation formembers under the age of sixty-two(62). One portion of the statute says the earnings limit is the social security earnings limit for those under age 62. Another portion of the statute says the earnings limit is the social security earnings limit for those under age 62 OR $15,000, whichever is less. The limit has been historically administered as the latter ad we would like to remove the contradictory language.
24
TRS Request Legislation - 2018
1. Terminating the 403(b) plan 70 O.S. §17-102.3 (Wording proposed in 2017 session. Consulting taxcounsel for specific language)
The Tax-Sheltered Annuity Program provided by Section 17-101 et seq. of this title shall satisfy the applicable qualification requirements for grandfathered governmental tax-sheltered annuity programs as specified in 26 U.S.C. Section 403(b) and the relevant regulatory provisions and guidance related thereto. In order to satisfy these requirements and guidelines, the Teachers' Retirement Tax-Sheltered Annuity Program shall be subject to the following provisions, notwithstanding any other provision of the law governing the Oklahoma Teachers' Retirement System:
(1) The Board of Trustees shall administer and distribute the corpus and income of the Tax-Sheltered Annuity Program to members and their beneficiaries pursuant to the applicable requirements under 26 U.S.C. Section 403(b), relevant regulatory provisions and guidance under 26 U.S.C. Section 403(b), and in accordance with the law governing the Oklahoma Teachers' Retirement System.
(2) All benefits paid from the retirement system shall be distributed in accordance with the applicable requirements of 26 U.S.C. Sections 403(b)(10) and 401(a)(9) and the regulations thereto.
(3) To the extent required by 26 U.S.C. Sections 403(b)(10) and 401(a)(31), the retirement system shall allow members and qualified beneficiaries to elect a direct rollover of eligible distributions to another eligible retirement plan.
(4) To the extent required under 26 U.S.C. Section 403(b)(11) and the regulations thereto, distributions under the Tax-Sheltered Annuity Program shall only be paid when the member attains the age of fifty-nine and one-half (59 1/2) years, separates from service, dies, becomes disabled, or in the case of hardship.
(5) The Board of Trustees may terminate its Tax-Sheltered Annuity Program (the “Program”) administered under 26 U.S.C., Section 403(b). The Board may only do so in a way that is consistent with federal tax law and minimizes financial harm to the participants in the Program. To assist in minimizing any such harm, all employers that participate in the Teachers’ Retirement System and maintain their own tax-sheltered annuity programs under Section 403(b) of the Code, and who employ a participant in the Program, or who employed a retired participant in the Program, shall permit the firm administering the Program on the effective date of this act to be a provider in the employers’ local programs. Such participation is only for the purpose of offering the same investment options to the participants that were available in the Program. Employers need only keep this firm as a provider for a two-year period beginning with the end of the local programs’ current plan year as of the effective date of this act. In addition the firm administering the Program must continue to be lawfully providing those investment options during that two-year period. Any active or retired participant in the local 403(b) programs may choose any other provider offered under that program.
2. Disability Retirements 70 O.S. 17-105
(1) (a) Any member who has attained age fifty-five (55) or who has completed thirty (30) years of creditable service, as defined in Section 17-101 of this title, or for any person who initially became a member prior to July 1, 1992, regardless of whether there were breaks in service after July 1, 1992, whose age and number of years of creditable service total eighty (80) may be retired upon proper application for retirement on forms established by the System and executing a retirement contract. Such a retirement date will also apply to any person who became a member of the sending system as defined in Section 17-101 et seq. of this title, prior to July 1, 1992, regardless of whether there were breaks in service after July 1, 1992. Any person who became a member after June 30, 1992, but prior to
25
November 1, 2011, whose age and number of years of creditable service total ninety (90) may be retired upon proper application for retirement and executing a retirement contract. Any person who becomes a member on or after November 1, 2011, who attains the age of sixty-five (65) years or who reaches a normal retirement date pursuant to subparagraph (d) of paragraph (24) of Section 17-101 of this title having attained a minimum age of sixty (60) years may be retired upon proper application for retirement and executing a retirement contract. The application shall be filed on the form provided by the Board of Trustees for this purpose, not less than sixty (60) days before the date of retirement, provided that the Executive Director may waive the sixty-day deadline for good cause shown as defined by the Board.
1. The employer shall provide the System with the following information for a retiring member, no laterthan the fifteenth day of the month of retirement: last day physically on the job; last day on payroll; any regular compensation not already reported to the System; and final unused sick leave balance.
2. Failure to submit this information by the deadline, or errors in submitted information that result in adisqualification of retirement eligibility shall be the responsibility of the employer. In cases where the error results in disqualification of retirement eligibility, it is the employer's responsibility to reemploy the member, or retain the member on the payroll, for the time period required to reach eligibility, not exceeding two (2) months.
(b) An individual who becomes a member of the Teachers' Retirement System after July 1, 1967, shall be employed by the public schools, state colleges or universities of Oklahoma for a minimum of five (5) years and be a contributing member of the Teachers' Retirement System of Oklahoma for a minimum of five (5) years to qualify for monthly retirement benefits from the Teachers' Retirement System of Oklahoma.
(c) Any member with five (5) or more years of Oklahoma teaching service and whose accumulated contributions during such period have not been withdrawn shall be given an indefinite extension of membership beginning with the sixth year following his or her last contributing membership and shall become eligible to apply for retirement and be retired upon attaining age fifty-five (55).
(2) An unclassified optional member who has retired or who retires at sixty-two (62) years of age or older or whose retirement is because of disability shall have his or her minimum retirement benefits calculated on an average salary of Five Thousand Three Hundred Fifty Dollars ($5,350.00) or, if a larger monthly allowance would result, an amount arrived at pursuant to application of the formula prescribed herein.
(3) No member shall receive a lesser retirement benefit than he or she would have received under the law in effect at the time he or she retired. Any individual under the Teachers' Retirement System, who through error in stating the title of the position which he or she held, may, at the discretion of the Board of Trustees, be changed from the nonclassified optional group to the classified group for the purpose of calculating retirement benefits.
Any individual regardless of residence, who has a minimum of ten (10) years of teaching in Oklahoma schools prior to July 1, 1943, or who taught in Oklahoma schools prior to 1934 and thereafter taught a minimum of ten (10) years and who does not qualify under the present retirement System, or who has a minimum of thirty (30) years of teaching in Oklahoma schools and has reached seventy (70) years of age prior to July 1, 1984, and is not otherwise eligible to receive any benefits from the retirement system
26
shall receive a minimum of One Hundred Fifty Dollars ($150.00) per month in retirement benefits from the Teachers' Retirement System of Oklahoma plus any general increase in benefits for annuitants as may be provided hereafter by the Legislature. Each individual must apply to the Teachers' Retirement System for such benefit and provide evidence to the Teachers' Retirement System that the service was actually rendered. The surviving spouse of any person who made application for the benefit provided for by this paragraph during his or her lifetime but did not receive said benefit may submit an application to the System for payment of said benefit for those months during the lifetime of the deceased person that he or she was eligible for but did not receive the benefit. Upon approval of the application by the Board of Trustees, the benefit shall be paid to the surviving spouse in one lump sum.
(4) The value of each year of prior service is the total monthly retirement benefit divided by the number of years of creditable service.
(5) Upon application of a member who is actively engaged in teaching in Oklahoma or his or her employer, any member who has been a contributing member for ten (10) years may be retired by the Board of Trustees System subsequent to the execution and filing thereof, on a disability retirement allowance, provided that it is found by the Board of Trustees Medical Board after medical examination of such member by a duly qualified physician that such member is mentally or physically incapacitated for further performance of duty, that such incapacity is likely to be permanent, and that such member should be retired. The Board of Trustees System shall rely on and give due full consideration to the conclusions and recommendations in the certified written report of the Medical Board of the Teachers' Retirement System regarding the disability application of such member. If the Medical Board does not find that a member applying for disability retirement is mentally or physically incapacitated for performance of duty or otherwise eligible for a disability retirement, the application shall then be considered by the Board of Trustees. If a member is determined to be eligible for disability benefits pursuant to the Social Security System, then such determination shall entitle the member to the authorized disability retirement allowance provided by law. For members who are not eligible for disability benefits pursuant to the Social Security System, the Board of Trustees and Medical Board shall apply the same standard for which provision is made in the first two sentences of this subsection for determining the eligibility of a person for such disability benefits in making a determination of eligibility for disability benefits as authorized by this subsection.
(6) (a) A member who at the time of retirement has been found to be permanently physically or mentally incapacitated to perform the necessary duties to continue in his or her current position shall receive a minimum monthly retirement payment for life or until such time as the member may be found to be recovered to the point where he or she may return to teaching. Any member retired before July 1, 1992, shall be eligible to receive the monthly retirement allowance herein provided, but such payment shall not begin until the first payment due him or her after July 1, 1992, and shall not be retroactive. The Board of Trustees is empowered to make such rules and regulations as it considers proper to preserve equity in retirements under this provision, which shall include a provision to protect the rights of the member's spouse.
(b) A member who has qualified for retirement benefits under disability retirement shall have the total monthly payment deducted from his or her accumulated contributions plus interest earned and any money remaining in the member's account after the above deductions at the death of the member shall be paid in a lump sum to the beneficiary or to the estate of the member. Provided, if the deceased disabled member had thirty (30) years or more of creditable service and the death occurred after June 30, 1981, and death occurred prior to the disabled member receiving twelve monthly retirement
27
payments, a surviving spouse may elect to receive the retirement benefit to which the deceased member would have been entitled at the time of death under the Option 2 Plan of Retirement provided for in subsection (8) of this section in lieu of the death benefit provided for in this subsection and in subsection (12) of this section.
(c) Once each year the Board of TrusteesSystem may require any disabled annuitant who has not yet attained the age of sixty (60) years to undergo a medical examination, such examination to be made at the place of residence for the disabled annuitant or other place mutually agreed upon by a physician or physicians designated by the Board of TrusteesSystem. Should any disabled annuitant who has not yet attained the age of sixty (60) years refuse to submit to at least one medical examination in any such year by a physician or physicians designated by the Board of TrusteesSystem his or her allowance may be discontinued until he or she submits to such examination.
(d) Should the Medical Board report and certify to the Board of Trustees that such disabled annuitant is engaged in or is able to engage in a gainful occupation paying more than the difference between his or her retirement allowance and the average final compensation, and should the Board of Trustees concur in such report then the amount of his or her pension shall be reduced to an amount which, together with his or her retirement allowance and that amount earnable by him or her, shall equal the amount of his or her average final compensation. Should his or her earning capacity be later increased, the amount of his or her pension may be further modified, provided the new pension shall not exceed that amount of the pension originally granted nor an amount, which when added to the amount earnable by the member, together with his or her annuity, equals the amount of his or her average final compensation.
(e) Should a disabled annuitant be restored to active service, his or her disability retirement allowance shall cease and he or she shall again become a member of the Teachers' Retirement System and shall make regular contributions as required under this article. The unused portion of his or her accumulated contributions shall be reestablished to his or her credit in the Teachers' Savings Fund. Any such prior service certificates on the basis of which his or her service was computed at the time of his or her retirement shall be restored to full force and effect.
(7) Should a member before retirement under Section 1-101 et seq. of this title make application for withdrawal duly filed with the System, not earlier than four (4) months after the date of termination of such service as a teacher, the contribution standing to the credit of his or her individual account in the Teachers' Savings Fund shall be paid to him or her or, in the event of his or her death before retirement, shall be paid to such person or persons as he or she shall have nominated by written designation, duly executed and filed with the System; provided, however, if there be no designated beneficiary surviving upon such death, such contributions shall be paid to his or her administrators, executors, or assigns, together with interest as hereinafter provided. In lieu of a lump-sum settlement at the death of the member, the amount of money the member has on deposit in the Teachers' Savings Fund and the money the member has on deposit in the Teachers' Deposit Fund may be paid in monthly payments to a designated beneficiary, who must be the spouse, under the Maximum or Option 1 Plan of Retirement providing the monthly payment shall be not less than Twenty-five Dollars ($25.00) per month. The monthly payment shall be the actuarial equivalent of the amount becoming due at the member's death based on the sex of the spouse and the age the spouse has attained at the last birthday prior to the member's death. Provided further, if there be no designated beneficiary surviving upon such death, and the contributions standing to the credit of such member do not exceed Two Hundred Dollars ($200.00), no part of such contributions shall be subject to the payment of any expense of the last illness or funeral of the deceased member or any expense of administration of the estate of such deceased and the
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System, upon satisfactory proof of the death of such member and of the name or names of the person or persons who would be entitled to receive such contributions under the laws of descent and distribution of the state, may authorize the payment of accumulated contributions to such person or persons. A member terminating his or her membership by withdrawal after June 30, 2003, shall have the interest computed at a rate of interest determined by the System and paid to him or her subject to the following schedule:
(a) If termination occurs within sixteen (16) years from the date membership began, fifty percent (50%) of such interest accumulations shall be paid.
(b) With at least sixteen (16) but less than twenty-one (21) years of membership, sixty percent (60%) of such interest accumulations shall be paid.
(c) With at least twenty-one (21) but less than twenty-six (26) years of membership, seventy-five percent (75%) of such interest accumulations shall be paid.
(d) With at least twenty-six (26) years of membership, ninety percent (90%) of such interest accumulations shall be paid.
In case of death of an active member, the interest shall be calculated and restored to the member's account and paid to his or her beneficiary.
(8) (a) In lieu of his or her retirement allowance payable throughout life for such an amount as determined under this section, the member may select a retirement allowance for a reduced amount payable under any of the following options the present value of which is the actuarial equivalent thereof.
(b) A member may select the option under which he or she desires to retire at the end of the school year in which he or she attains age seventy (70) and the option shall be binding and cannot be changed. Provided further that if a member retires before age seventy (70), no election of an option shall be effective in case an annuitant dies before the first payment due under such option has been received.
(c) The first payment of any benefit selected shall be made on the first day of the month following approval of the retirement by the System. If the named designated beneficiary under Option 2 or 3 dies at any time after the member's retirement date, but before the death of the member, the member shall return to the retirement benefit, including any postretirement benefit increases the member would have received had the member not selected Option 2 or 3 of this subsection. The benefit shall be determined at the date of death of the designated beneficiary or July 1, 1994, whichever is later. This increase shall become effective the first day of the month following the date of death of the designated beneficiary or July 1, 1994, whichever is later, and shall be payable for the member's remaining lifetime. The member shall notify the Teachers' Retirement System of Oklahoma of the death of the designated beneficiary in writing. In the absence of the written notice being filed by the member notifying the Teachers' Retirement System of Oklahoma of the death of the designated beneficiary within six (6) months of the date of death, nothing in this subsection shall require the Teachers' Retirement System of Oklahoma to pay more than six (6) months of retrospective benefits increase.
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Option 1. If he or she dies before he or she has received in annuity payments the present value of his or her annuity as it was at the time of his or her retirement, the balance shall be paid to his or her legal representatives or to such person as he or she shall nominate by written designation duly acknowledged and filed with the System at the time of his or her retirement; or
Option 2. A member takes a reduced retirement allowance for life. Upon the death of the member the payments shall continue to the member's designated beneficiary for the life of the beneficiary. The written designation of the beneficiary must be duly acknowledged and filed with the System at the time of the member's retirement and, except as provided in paragraph (e) of this subsection, cannot be changed after the effective date of the member's retirement; or
Option 3. A member receives a reduced retirement allowance for life. Upon the death of the member one-half (1/2) of the retirement allowance paid the member shall be continued throughout the life of the designated beneficiary. A written designation of a beneficiary must be duly acknowledged and filed with the System at the time of the member's retirement and, except as provided in paragraph (e) of this subsection, cannot be changed after the effective date of the member's retirement; or
Option 4. Some other benefit or benefits shall be paid either to the member or to such person or persons as he or she shall nominate, provided such other benefit or benefits, together with the reduced retirement allowance, shall be certified by the actuary to be of equivalent actuarial value to his or her retirement allowance and shall be approved by the System.
(d) Provided that Option 2 and Option 3 shall not be available if the member's expected benefit is less than fifty percent (50%) of the lump-sum actuarial equivalent and the designated beneficiary is not the spouse of the member.
(e) A member who chose the maximum retirement benefit plan at the time of retirement may make a one-time election to choose either Option 2 or 3 and name the member's spouse as designated beneficiary if the member marries after making the initial election. Such an election shall be made by July 1, 2011, or within one (1) year of the date of marriage, whichever is later. The member shall provide proof of a member's good health before the Board of Trustees will permit a change to either Option 2 or 3 and the naming of a designated beneficiary. A medical examination conducted by a licensed physician is required for purposes of determining good health. Such examination must be approved by the Medical Board. The member shall be required to provide proof of age for the new beneficiary. The Board of Trustees shall adjust the monthly benefit to the actuarially equivalent amount based on the new designated beneficiary's age. The Board of Trustees shall promulgate rules to implement the provisions of this subsection.
(f) A member who retires after the effective date of this act and has selected a retirement allowance for a reduced amount payable under one of the options provided for in this subsection may make a one-time irrevocable election to select a different option within sixty (60) days of the member's retirement date. The beneficiary designated by the member at the time of retirement shall not be changed if the member makes the election provided for in this paragraph.
(g) Any individual who is eligible to be a beneficiary of a member under this subsection, and who is also a beneficiary of a trust created under the Oklahoma Discretionary and Special Needs Trust Act, Section 175.81 et seq. of Title 60 of the Oklahoma Statutes, or a comparable Trust Act created under the laws of
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another state, hereinafter collectively referred to as "Trust Acts", may be a beneficiary under this subsection by having the trustee of the trust established for the benefit of that individual named as the legal beneficiary under this subsection. The age of that beneficiary shall be used for calculating any benefit payable to the trust under this subsection. The beneficiary of such a trust shall be treated as the beneficiary under this subsection except that payments of any benefits due under this subsection shall be payable to the lawfully appointed trustee of the trust. The obligation of the System to pay the beneficiary under this subsection shall be satisfied by payment to the trustee whom the System, in good faith, believes to be the lawfully appointed trustee. Any conflict between the statutes creating and governing the Teachers' Retirement System in Section 17-101 et seq. of this title and the provisions of any Trust Act referred to above shall be resolved in favor of the statutes governing the System. If an eligible beneficiary is named at the time of retirement, and becomes a beneficiary of a trust under one of the Trust Acts described herein after that time, the System will acknowledge the trust as the beneficiary upon the submission of adequate documentation of the existence of the trust. All other provisions of this subsection shall apply to these subsequently created trusts.
(h) The Board of Trustees of the System may recognize other trusts set up for the benefit of individuals otherwise eligible to be named as a beneficiary under this subsection by administrative rule if it can be done without undue additional administrative expense of the System.
(9) The governing board of any "public school", as that term is defined in Section 17-101 of this title, is hereby authorized and empowered to pay additional retirement allowances or compensation to any person who was in the employ of such public school for not less than seven (7) school years preceding the date of his or her retirement. Payments so made shall be a proper charge against the current appropriation or appropriations of any such public school for salaries for the fiscal year in which such payments are made. Such payments shall be made in regular monthly installments in such amounts as the governing board of any such public school, in its judgment, shall determine to be reasonable and appropriate in view of the length and type of service rendered by any such person to such public school by which such person was employed at the time of retirement. All such additional payments shall be uniform, based upon the length of service and the type of services performed, to persons formerly employed by such public school who have retired or been retired in accordance with the provisions of Section 17-101 et seq. of this title.
The governing board of any such public school may adopt rules and regulations of general application outlining the terms and conditions under which such additional retirement benefits shall be paid, and all decisions of such board shall be final.
(10) In addition to the teachers' retirement herein provided, teachers may voluntarily avail themselves of the Federal Social Security Program upon a district basis.
(11) Upon the death of an in-service member, the System shall pay to the designated beneficiary of the member or, if there is no designated beneficiary or if the designated beneficiary predeceases the member, to the estate of the member, the sum of Eighteen Thousand Dollars ($18,000.00) as a death benefit. Provided, if the deceased member had ten (10) years or more of creditable service and the death occurred after February 1, 1985, the member's designated beneficiary may elect to receive the retirement benefit to which the deceased member would have been entitled at the time of death under the Option 2 plan of retirement in lieu of the death benefit provided for in this subsection. Provided further, the option provided in this subsection is only available when the member has designated one individual as the designated beneficiary. The beneficiary or beneficiaries of death benefits in the amount
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not to exceed Eighteen Thousand Dollars ($18,000.00), but exclusive of any retirement benefit received by an electing beneficiary based upon creditable service performed by the deceased member, which are provided pursuant to this subsection may elect to disclaim such death benefits in which case such benefits will be transferred to a person licensed as a funeral director or to a lawfully recognized business entity licensed as required by law to provide funeral services for the deceased member. The qualified disclaimer must be in writing and will be an irrevocable and an unqualified refusal to accept all or a portion of the death benefit. It must be received by the transferor no more than nine (9) months after the later of the day the transfer creating the interest in the disclaiming person is made or the day the disclaiming person attains age twenty-one (21). The interest in the death benefits must pass without direction by the disclaiming person to another person.
(12) Upon the death of an annuitant who has contributed to the System, the retirement system shall pay to the designated beneficiary of the annuitant or, if there is no designated beneficiary or if the designated beneficiary predeceases the annuitant, to the estate of the annuitant, the sum of Five Thousand Dollars ($5,000.00) as a death benefit. The beneficiary or beneficiaries of benefits provided pursuant to this subsection may elect to disclaim such death benefits in which case such benefits will be transferred to a person licensed as a funeral director or to a lawfully recognized business entity licensed as required by law to provide funeral services for the deceased member. The qualified disclaimer must be in writing and will be an irrevocable and an unqualified refusal to accept all or a portion of the death benefit. It must be received by the transferor no more than nine (9) months after the later of the day the transfer creating the interest in the disclaiming person is made or the day the disclaiming person attains age twenty-one (21). The interest in the death benefits must pass without direction by the disclaiming person to another person. The benefit payable pursuant to this subsection shall be deemed, for purposes of federal income taxation, as life insurance proceeds and not as a death benefit if the Internal Revenue Service approves this provision pursuant to a private letter ruling request which shall be submitted by the board of trustees of the System for that purpose.
(13) Upon the death of a member who dies leaving no living beneficiary or having designated his or her estate as beneficiary, the System may pay any applicable death benefit, unpaid contributions, or unpaid benefit which may be subject to probate, in an amount of Twenty-five Thousand Dollars ($25,000.00) or less, without the intervention of the probate court or probate procedure pursuant to Section 1 et seq. of Title 58 of the Oklahoma Statutes.
(a) Before any applicable probate procedure may be waived, the System must be in receipt of the member's proof of death and the following documents from those persons claiming to be the legal heirs of the deceased member:
1. The member's valid last will and testament, trust documents or affidavit that a will does not exist;
2. An affidavit or affidavits of heirship which must state:
a. the names and signatures of all claiming heirs to the deceased member's estate including the claimingheirs' names, relationship to the deceased, current addresses, tax I.D. numbers if known and current telephone numbers,
b. a statement or statements by the claiming heirs that no application or petition for the appointment ofa personal representative is pending or has been granted in any jurisdiction,
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c. a description of the personal property claimed, (i.e., death benefit or unpaid contributions or both)together with a statement that such personal property is subject to probate,
d. a statement by each individual claiming heir identifying the amount of personal property that the heiris claiming from the System, and that the heir has been notified of, is aware of and consents to the identified claims of all the other claiming heirs of the deceased member pending with the System;
3. A written agreement or agreements signed by all claiming heirs of the deceased member whichprovides that the claiming heirs release, discharge and hold harmless the System from any and all liability, obligations and costs which it may incur as a result of making a payment to any of the deceased member's heirs;
4. A corroborating affidavit from an individual other than a claiming heir, who was familiar with theaffairs of the deceased member;
5. Proof that all debts of the deceased member, including payment of last sickness, hospital, medical,death, funeral and burial expenses have been paid or provided for.
(b) The Executive Director of the System shall retain complete discretion in determining which requests for probate waiver may be granted or denied, for any reason. Should the System have any question as to the validity of any document presented by the claiming heirs, or as to any statement or assertion contained therein, the probate requirement provided for in Section 1 et seq. of Title 58 of the Oklahoma Statutes, shall not be waived.
(c) After paying any death benefits or unpaid contributions to any claiming heirs as provided pursuant to this subsection, the System is discharged and released from any and all liability, obligation and costs to the same extent as if the System had dealt with a personal representative of the deceased member. The System is not required to inquire into the truth of any matter specified in this subsection or into the payment of any estate tax liability.
(14) Upon the death of a retired member, the benefit payment for the month in which the retired member died, if not previously paid, shall be made to the beneficiary of the member or to the member's estate if there is no beneficiary. Such benefit payment shall be made in an amount equal to a full monthly benefit payment regardless of the day of the month in which the retired member died.
3. ESSIP – 70 O.S. 17-116.2(c)
1. "Contribution deficit" means the amount of money computed for an eligible employee by multiplyingthe employee contribution rate in effect for any period of service performed on or after July 1, 1987, through June 30, 1995, multiplied by the amount of salary earned by the member in excess of the applicable maximum compensation level of the member for such period with interest at the rate of ten percent (10%) per year compounded annually; provided, that for the designated fiscal years prescribed by subparagraphs a and b of this paragraph, the contribution deficit payment shall be adjusted to:
a. fifty percent (50%) of the total amount of the computation otherwise prescribed by this paragraph forthe fiscal year ending June 30, 2007,
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b. seventy-five percent (75%) of the total amount of the computation otherwise prescribed by thisparagraph for the fiscal year ending June 30, 2008, and
c. one hundred percent (100%) of the total amount of the computation otherwise prescribed by thisparagraph for the fiscal year ending June 30, 2009, and for each fiscal year thereafter;
2. "Eligible employee" means a member of the System who has not retired prior to the effective date ofthis act and who has performed service at any time prior to June 30, 1995, and who fulfills the requirements of this act with respect to inclusion of pre-cap removal years of service in a retirement benefit computation and:
a. who has already reached a normal retirement age prior to the effective date of this act and has notretired prior to the effective date of this act,
b. who reaches a normal retirement age on or after the effective date of this act, and
c. who is employed by an institution within The Oklahoma State System of Higher Education that is not acomprehensive university or a regional institution offering a four-year degree program as designated or authorized by the Oklahoma State Regents for Higher Education;
3. "Maximum average salary amount", subject to the requirements of this paragraph related to thefunding level for employer contribution rates, means:
a. Sixty Thousand Dollars ($60,000.00) regardless of any otherwise applicable maximum compensationlevel for the fiscal year ending June 30, 2007,
b. Eighty Thousand Dollars ($80,000.00) regardless of any otherwise applicable maximum compensationlevel for the fiscal year ending June 30, 2008, and
c. the full amount of the average salary without any limitation for the fiscal year ending June 30, 2009,and or each fiscal year thereafter.
The maximum final average salary amount otherwise authorized pursuant to subparagraph b or subparagraph c of this paragraph shall be contingent upon the participating employer in whose employment the member is active upon the date the member retires receiving, for the fiscal year during which the member’s retirement will begin, the amount of funds required pursuant to paragraph 8 of Section 17-108.1 of this title in order to allow the employer contribution rates prescribed by paragraphs 6, 7 and 8 of Section 17-108.1 of this title to be effective as law. If a member is employed by an employer that does not receive the funding required by paragraph 8 of Section 17-108.1 of this title for the fiscal year during which the member’s retirement will begin, the member shall not be authorized to use the maximum final average salary otherwise authorized by this paragraph to compute retirement benefits. A member shall be required to have been employed by a participating employer for a period of at least twelve (12) months prior to retirement in order to compute a retirement benefit using the maximum final average salary authorized by this paragraph;
4. "Maximum compensation level" means either:
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a. Twenty-five Thousand Dollars ($25,000.00) if a member did not elect to make employee contributionson a higher salary amount for any pre-cap removal years of service, or
b. Forty Thousand Dollars ($40,000.00) if a member did elect to make employee contributions uponactual salary not in excess of such amount for any pre-cap removal years of service;
5. "Pre-cap removal service" means any service performed by an active member prior to June 30, 1995;and
6. "System" means the Teachers’ Retirement System of Oklahoma;
B. Unless otherwise expressly provided by this section, any definition contained in Section 17-101 of this title otherwise applicable to computation of benefits for retired members of the Teachers’ Retirement System of Oklahoma shall have the same meaning for purposes of this section.
C. Effective July 1, 2006, any eligible member of the Teachers’ Retirement System of Oklahoma, who, as of July 1, 2006, has already reached a normal retirement age or who on or after July 1, 2006, reaches a normal retirement age as defined by paragraph 24 of Section 17-101 of this title, shall be eligible to have a retirement benefit computed as provided by this section. If a member is eligible for the benefit computation authorized by this section, the average salary used to compute the retirement benefit of the member shall be governed by the provisions of this section and such provisions shall govern in the event of conflict between this section and the provisions of Section 17-116.2 of this title.
D. An eligible employee who performs service in the manner prescribed by subsection E of this section and who makes payment of the applicable contribution deficit amount may have a retirement benefit computed as otherwise authorized by Section 17-105 of this title, but shall have such benefit computed without regard to any maximum compensation level that would otherwise be applicable to the compensation of the member for any period of pre-cap removal service.
E. In order to have retirement benefits computed as authorized by subsection C of this section, and in addition to the payment of the contribution deficit amount required by this section, in order to have any pre-cap removal service included in the retirement benefit computation of the member using the average salary earned during such period of participating service subject to the maximum average salary amount, the member shall be required to perform one (1) year of participating service on or after the date as of which the member reaches a normal retirement age, for each two (2) years of service performed prior to July 1, 1995. For purposes of this section, any year of service performed prior to the effective date of this act after a member reached a normal retirement age shall qualify for purposes of the retirement benefit computation authorized by this section.
F. One (1) year of participating service performed by an eligible member who, prior to the effective date of this act has reached a normal retirement age or, who on or after July 1, 2006, reaches a normal retirement age, shall result in the inclusion of the two (2) years of participating service immediately preceding July 1, 1995, in a retirement benefit computation using the average salary of the member, subject to the maximum average salary amount. For each additional year of participating service performed by the eligible member thereafter, whether such service has been performed prior to the effective date of this act or whether such service is performed on or after the effective date of this act, the two (2) next succeeding years of pre-cap removal service performed prior to the end of the
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preceding two-year period may be included in the benefit computation without regard to the maximum compensation level of the member that would otherwise be applicable to such pre-cap removal service.
G. The eligible member shall be required to make payment to the Teachers’ Retirement System of Oklahoma of the contribution deficit amount for any year of service performed on or after July 1, 1987, but not later than June 30, 1995, as prescribed by subsections H through K of this section in order to have any years of pre-cap removal service included in the retirement benefit computation using the average salary of the member subject to the maximum average salary amount.
H. In order to have years of service included in the benefit computation using average salary subject to the maximum average salary amount, the member shall be required to make payment of the contribution deficit for the following years of service and in the sequence prescribed by subsection I of this section according to the adjustments required by subparagraphs a and b of paragraph 1 of subsection A of this section:
1. July 1, 1987, through June 30, 1988;
2. July 1, 1988, through June 30, 1989;
3. July 1, 1989, through June 30, 1990;
4. July 1, 1990, through June 30, 1991;
5. July 1, 1991, through June 30, 1992;
6. July 1, 1992, through June 30, 1993;
7. July 1, 1993, through June 30, 1994; and
8. July 1, 1994, through June 30, 1995.
I. For each year of service performed by the eligible member prior to the effective date of this act and after having reached a normal retirement age, or for each year of service performed by the member after reaching a normal retirement age on or after the effective date of this act, the member shall be required to make payment of the contribution deficit amount for each year of service beginning with the years described in paragraphs 7 and 8 of subsection H of this section. For each additional year of service performed by the eligible member after the normal retirement age of the member, the member shall make payment of the contribution deficit amount for each of the next two (2) years of service as described in:
1. Paragraphs 5 and 6 of subsection H of this section;
2. Paragraphs 3 and 4 of subsection H of this section; and
3. Paragraphs 1 and 2 of subsection H of this section.
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J. After making payment of all required contribution deficit amounts for all periods of service described in paragraphs 1 through 8 of subsection H of this section, an eligible member who has performed any additional years of service after having reached a normal retirement age, or for each year of service performed by the member after reaching a normal retirement age on or after the effective date of this act, the member may then include any additional two-year period of service performed prior to July 1, 1987, using the average salary of the member, subject to the maximum average salary amount, in the retirement benefit computation for such years of service by performing one (1) additional year of service.
K. No contribution deficit payments shall be required of the eligible member with respect to years of service performed prior to July 1, 1987, if such years of service are included in the retirement benefit computation of the member using average salary as otherwise authorized by this section, subject to the maximum average salary amount.
L. An eligible member may make the payment of the contribution deficit amount required by this section at any time prior to the retirement of the member from the System; however, no years of pre-cap removal service for which full payment of the required contribution deficit has not been made pursuant to the requirements of this section may be included in the retirement benefit computation of the otherwise eligible member using the average salary of the member for such period, subject to the maximum average salary amount.
M. Any pre-cap removal years of service for which the required contribution deficit payment has not been made to the System shall only be included in a retirement benefit computation using the maximum compensation level in effect for the member at the time such years of service were performed.
N. All payments to the System for pre-cap removal service shall be made prior to the date as of which a member retires. No payments to the System for pre-cap removal service otherwise authorized by this section shall be made after a member retires from the System and begins to receive benefits.
O. Any eligible member who, prior to the effective date of this act, has not previously made an election for payment of employee contributions on a maximum compensation level of Twenty-five Thousand Dollars ($25,000.00) for pre-cap removal service may file an election with the System to make payment of the required contribution deficit amount pursuant to this section. Such an election shall be irrevocable.
P. No participating employer of the System shall make payment of any required contribution deficit amount on behalf of any otherwise eligible member, whether directly or indirectly, in order for the member to have retirement benefits computed according to the provisions of this section.
Q. No member of the System who has retired prior to July 1, 2006, shall be eligible to make any payments of the contribution deficit amount and no such member shall have the ability to have a retirement benefit recomputed as a result of the provisions of this section.
R. The additional retirement benefit attributable to the provisions of this section may be computed for members who retire on or after July 1, 2006, but prior to January 1, 2007, but the additional retirement benefit attributable to the provisions of this section shall not be payable until January 1, 2007. On and
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after January 1, 2007, the additional retirement benefit attributable to the provisions of this section shall be added to the retirement benefit amount of any member who retires on or after July 1, 2006, and prior to January 1, 2007, and such increased benefit amount shall be payable to the member or any beneficiary of the member as otherwise provided pursuant to the provisions of Section 17-101 of this title in the same manner as other retirement benefits are payable.
4. Post-retirement 70 O.S. 17-116.10
A. Subject to the requirements of Section 6-101.2 of this title and any other applicable requirements of law, a member may enter into postretirement employment with a public school of Oklahoma and still receive monthly retirement benefits subject to the following limitations:
1. A retired member is not eligible to be employed by the public schools of Oklahoma, in any capacity,for sixty (60) calendar days between the retiree's last day of preretirement public-education employment and any postretirement public-education employment. For purposes of this section, the term "last day of preretirement employment" shall mean the last day the employee is required to be physically present on the job to complete the terms of the employment contract or agreement. An employee on paid leave is still considered to be employed for purposes of this section. Employment under any conditions during this time, volunteer services for the purpose of obtaining a paid position at a later date, or payment at a later time for services performed during this time period shall cause the forfeiture of all retirement benefits received during the period;
2. Unless otherwise provided in paragraph 3 of this subsection, earnings from the public schools may notexceed one-half (1/2) of the member's final average salary used in computing retirement benefits, or the Earnings Limitation for employees allowed by the Social Security Administration, whichever is less. For retired members under the age of sixty-two (62) years, the limit on allowed earnings from the public schools of Oklahoma for employment for the performance of duties ordinarily performed by classified or nonclassified personnel shall be the lesser of Fifteen Thousand Dollars ($15,000.00) or one-half (1/2) of the member's final average salary used in computing retirement benefits unless the earnings limitation allowed by the Social Security Administration would be greater than Fifteen Thousand Dollars ($15,000.00). For retired members sixty-two (62) years of age or older the limit on allowed earnings from the public schools of Oklahoma for the performance of duties ordinarily performed by classified or nonclassified personnel shall be the lesser of Thirty Thousand Dollars ($30,000.00) or one-half (1/2) of the member's final average salary used in computing retirement benefits. For purposes of this paragraph, the following shall apply:
a. earnings shall mean "regular annual compensation" as defined in paragraph (25) of Section 17-101 ofthis title, and shall include any payment by a public school for services rendered by a retired member who is employed for any purpose whatsoever. Supplemental retirement payments paid by a former public school employer pursuant to subsection 9 of Section 17-105 of this title or other state law shall not be considered as earnings,
b. the Earnings Limitation for employees allowed by the Social Security Administration to workersbetween the age of sixty-two (62) years and sixty-five (65) years shall apply to retired members below the age of sixty-two (62) years,
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cb. the limit on allowed earnings from the public schools shall be automatically adjusted effective the first day of January of each year to reflect the current Earnings Limitation for employees as determined from time to time by the Social Security Administration,
dc. the earnings limit for the calendar year in which a member retires shall be one-twelfth (1/12) of the annual limit multiplied by the number of months the member is eligible to work and receive payments from the public schools of Oklahoma,
ed. earnings in excess of the maximum limit on allowed earnings from public schools of Oklahoma shall result in a loss of future retirement benefits for the year the postretirement employment was performed of One Dollar ($1.00) for each One Dollar ($1.00) earned over the maximum allowed earnings amount,
fe. for those members age seventy (70) years and over, the earnings in excess of the maximum limit allowed earnings from public schools of Oklahoma shall be one-half (1/2) the member's final average salary used in computing retirement benefits. However, any retired member receiving benefits from the Retirement System who reached age seventy (70) years prior to July 1, 1991, shall not be restricted by the earnings limits pursuant to this subparagraph until January 1, 1994. To qualify for the provisions of this subparagraph, the member must be employed less than one-half (1/2) time compared to other full-time employees in similar positions;
3. Notwithstanding paragraph 2 of this subsection, a retired classified or nonclassified member who hasbeen retired for thirty-six (36) or more months and who is employed by a public school to perform duties ordinarily performed by classified or nonclassified personnel shall be able to receive annualized earnings from the public school with no reduction in retirement benefits regardless of the amount of annualized earnings. For a period of three (3) years beginning July 1, 2017, members who have retired as of July 1, 2017, as active classroom teachers, who have been retired and receiving a benefit for at least one (1) year, and who have not been employed by any public school during that one-year period, shall be eligible to be reemployed as an active classroom teacher in common or career tech school districts, with no limitations on earnings. The one-year period starts with the retiree's last day of preretirement public education employment. Members returning under this section shall not be subject to any earning limitations following the end of the three-year period described in this paragraph. Members returning under this section shall only be employed pursuant to a temporary contract; and
4. A member shall be considered to be employed by a school district to perform the duties ordinarilyperformed by classified or nonclassified personnel if the member is hired by the school district in the member's individual capacity to perform the duties or if the member performs the duties through employment with a proprietorship, partnership, corporation, limited liability company or partnership, or any other business structure that has agreed or contracted to provide the services to the school district.
B. A public school district that employs a retired member shall be required to make contributions to the System for the retired member in an amount as required in Section 17-108.1 and in paragraph 3 of subsection B of Section 17-116.2 of this title.
C. For purposes of this section, postretirement employment of less than one thousand (1,000) hours per year with the Governor, the State Senate, the House of Representatives or the Legislative Service Bureau shall not be considered as postretirement employment with a public school of Oklahoma.
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D. The Board of Trustees of the Teachers' Retirement System of Oklahoma shall promulgate such rules as are necessary to implement the provisions of this section.
E. A member who has entered into postretirement employment with a participating employer of the Teachers' Retirement System of Oklahoma must fully comply with all the provisions of the rules promulgated by the Board of Trustees pursuant to this section in order to continue receiving his or her monthly retirement benefit.
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Count Benefit Total
Average
Benefit
Average Years
of Service
Average
Age
Disability 4 $4,737.70 $1,184.43 18.50 56.50
Normal 128 $164,254.68 $1,283.24 18.40 62.99
Total 132 $168,992.38 $1,280.25 18.40 62.79
149 ($192,715.02) $1,293.39 23.38 79.91
Monthly Retirement Status Report
From 11/1/2017 to 11/30/2017
New Retirements
Terminated Annuities
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Client
Number
Years Of
Service Age
Estimate
Ret. Date
Retirement
Number BenefitQ0217843 15 56 11/1/2017 D112600 $837.08
Q0131319 21 55 11/1/2017 D112601 $787.50
Q0188335 22 54 11/1/2017 D112602 $1,529.21
Q0126083 16 61 12/1/2017 D112615 $1,583.91
Averages 18.50 56.50 $1,184.43 18.5 56.5 Totals 4 $4,737.70
DISABILITY RETIREMENTS From 11/1/2017 to 12/1/2017
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