NV PERS BOARD MEETING NOTES
March 19, 2020
The chairs were separated to achieve the social distancing requirements suggested during this time of uncertainty as the Nevada Public Employees’ Retirement System Board (PERS) met for their regular meeting March 19 in Carson City. Nothing was regular at the meeting however, as rather than have several rows of chairs lined up to accommodate 20-30 members of the public and staff that typically attend, there were only around 5-6 chairs set up for an audience of roughly four attendees. Among them was RPEN’s Executive Director Terri Laird. PERS Board meetings are usually video-conferenced to Las Vegas to allow members of the public to attend, but because of the virus situation, PERS offices in Las Vegas and Carson City are currently closed to the public until further notice, so the only reason PERS in Carson was open was to accommodate the state’s open meetings law, and it was closed off again immediately after the meeting. The only staff in the audience was Executive Officer Tina Leiss and Investment Officer Steve Edmundson.
There was essentially only one big item of discussion, involving the dramatic fall of the stock market along with the treasury and bonds market, which Edmundson called historical. He said Bear Markets like what we’re experiencing now are common, occurring nine separate occasions in the last 100 years, when stocks drop 30% or more. He said such a magnitude isn’t that unusual, but the speed of which it occurred is. However, Edmundson said what’s happening with the U-S Bond Market has never happened before! Calling it an extraordinary event, Edmundson said it’s something that hasn’t happened in 150+ years!
On the positive side, he said he doesn’t expect it to last forever. He said the purpose of sharing this information with the Board was to seek guidance as to how to proceed going forward in the months to come as things begin to improve. Edmundson related five options to consider: Unprecedented yield changes in the U-S Treasury Market; Risk-free rates are at historic lows; Diversification benefits of current policy benchmark to stocks are limited at current rates; Bonds are still a good diversifier to stocks but shortening duration reduces portfolio risk; and Consider a recommendation to change the U-S Bond Policy Benchmark.
Edmundson told the board there’s a lot going on in the bond market now and the Board gave staff approval to keep an eye on things and change the portfolio if it’s so required before their next meeting, if they felt it to be a good thing to do. Edmundson finalized his report saying this was one of the more compelling things he’d seen in his career.
Executive Officer Tina Leiss said they aren’t sure there will be a meeting in April, based on what’s going on with the virus but they’ll have time to decide before the meeting, slated to be held April 16 in Las Vegas. She did say it’s highly unlikely the meeting will be held in the south.