Approp SERS-PSERS 3-7-16.Trn
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1 1 2 COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES 3 APPROPRIATIONS COMMITTEE 4 MAIN CAPITOL 5 ROOM 140 HARRISBURG, PENNSYLVANIA 6 7 BUDGET HEARING PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM 8 AND STATE EMPLOYEES' RETIREMENT SYSTEM 9 10 MONDAY, MARCH 7, 2016 10:01 A.M. 11 12 BEFORE: 13 HONORABLE WILLIAM F ADOLPH, JR., Majority Chairman 14 HONORABLE KAREN BOBACK HONORABLE JIM CHRISTIANA 15 HONORABLE GARY DAY HONORABLE GEORGE DUNBAR 16 HONORABLE GARTH EVERETT HONORABLE KEITH GREINER 17 HONORABLE SETH GROVE HONORABLE SUE HELM 18 HONORABLE WARREN KAMPF HONORABLE FRED KELLER 19 HONORABLE TOM KILLION HONORABLE JIM MARSHALL 20 HONORABLE KURT MASSER HONORABLE DAVID MILLARD 21 HONORABLE DUANE MILNE HONORABLE MARK MUSTIO 22 HONORABLE MIKE PEIFER HONORABLE JEFFREY PYLE 23 HONORABLE CURT SONNEY HONORABLE MIKE VEREK 24 HONORABLE JOSEPH MARKOSEK, Minority Chairman HONORABLE LESLIE ACOSTA 25 HONORABLE MATTHEW BRADFORD 2 1 BEFORE: (cont'd' 2 HONORABLE TIM BRIGGS HONORABLE DONNA BULLOCK 3 HONORABLE MARY JO DALEY HONORABLE MADELEINE DEAN 4 HONORABLE STEPHEN KINSEY HONORABLE MICHAEL O'BRIEN 5 HONORABLE MAKR ROZZI HONORABLE KEVIN SCHREIBER 6 HONORABLE PETER SCHWEYER 7 ALSO PRESENT: 8 HONORABLE CRIS DUSH HONORABLE MATT GABLER 9 HONORABLE MARK GILLEN HONORABLE ROBERT GODSHALL 10 HONORABLE ADAM HARRIS HONORABLE KRISTIN PHILLIPS HILL 11 HONORABLE DARYL METCALFE HONORABLE SCOTT PETRI 12 HONORABLE TINA PICKETT HONORABLE RICK SACCONE 13 HONORABLE STAN SAYLOR HONORABLE DOM COSTA 14 HONORABLE JARET GIBBONS HONORABLE MARK LONGIETTI 15 HONORABLE EDDIE PASHINSKI 16 DAVID DONLEY, MAJORITY EXECUTIVE DIRECTOR 17 RITCHIE LAFAVER, MAJORITY DEPUTY EXECUTIVE DIRECTOR CURT SCHRODER, MAJORITY CHIEF COUNSEL 18 MIRIAM FOX, MINORITY EXECUTIVE DIRECTOR TARA TREES, MINORITY CHIEF COUNSEL 19 20 BRENDA J. PARDUN, RPR P. O. BOX 278 21 MAYTOWN, PA 17550 717-426-1596 PHONE 22 23 24 25 3 1 INDEX 2 NAME PAGE 3 MELVA VOGLER 9 CHAIRPERSON OF THE BOARD 4 PSERS 5 GLEN GRELL 11 EXECUTIVE DIRECTOR 6 PSERS 7 JAMES GROSSMAN 47 CHIEF INVESTMENT OFFICER 8 PSERS 9 DAVID FILLMAN 11 CHAIRMAN OF THE BOARD 10 SERS 11 DAVID DURBIN 13 EXECUTIVE DIRECTOR 12 SERS 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 P R O C E E D I N G S 2 MAJORITY CHAIRMAN ADOLPH: Good 3 morning, everyone. I’d like to reconvene the 4 House Appropriations Committee for the 5 2016-’17 budget hearing. 6 Before we get started with the 7 testimony, we’d just go over a couple 8 housekeeping things. We have a full room 9 here. And I want to remind everyone that this 10 hearing is televised, and that if you just 11 take a second and check your cell phones and 12 your iPhones and iPads and all the electronic 13 equipment that you may carry on you and kind 14 of turn it off. Okay? Because it does 15 interfere with the testimony and the telecast. 16 Thank you. 17 We always have an opportunity to 18 introduce the Appropriations members in the 19 beginning of the day to give the testifiers an 20 idea of how large this committee is and also 21 give you an idea of all the areas that members 22 of this committee reside. 23 So, I’m going to start off. My 24 name’s Bill Adolph. I’m the Republican chair 25 of the Appropriations Committee. I’m from 5 1 Delaware County, 165th Legislative District. 2 MINORITY CHAIRMAN MARKOSEK: Good 3 morning. I’m state Representative Joe 4 Markosek, 25th Legislative District. I’m the 5 Democratic chairman of House Appropriations 6 Committee. My district, I represent an area 7 that is the eastern suburbs of the Allegheny 8 County. 9 MS. FOX: Hi. I’m Miriam Fox. I’m 10 the executive director for the Appropriations 11 Committee, Democrats. 12 REPRESENTATIVE SCHREIBER: Good 13 morning, everyone. Over here to your left. 14 Kevin Schreiber, state representative, 95th 15 District, York County. 16 REPRESENTATIVE DEAN: Good morning 17 and welcome. I’m Madeleine Dean, from the 18 133rd, Montgomery County. 19 REPRESENTATIVE DALEY: Good morning. 20 Mary Jo Daley, 148th, in Montgomery County. 21 REPRESENTATIVE BOBACK: Good morning. 22 Representative Karen Boback, House District 23 117, Luzerne, Lackawanna, and Wyoming 24 counties. 25 I see some additional members just 6 1 stepped in, so we’ll put the mic over to them. 2 REPRESENTATIVE BRIGGS: Good morning. 3 Tim Briggs, Montgomery County, 149th District. 4 REPRESENTATIVE SCHWEYER: Good 5 morning. Peter Schweyer, Lehigh County, 22nd 6 District. 7 REPRESENTATIVE HELM: Good morning. 8 Sue Helm, 104th District, Dauphin and Lebanon 9 counties. 10 MR. DONLEY: Dave Donley, Republican 11 staff executive director for the committee. 12 MR. SCHRODER: Curt Schroder, chief 13 counsel, Republicans. 14 REPRESENTATIVE METCALFE: Daryl 15 Metcalfe, House State Government Committee, 16 Butler County, 12th District. 17 REPRESENTATIVE MILNE: Good morning. 18 Duane Milne, from Chester County. 19 REPRESENTATIVE MASSER: Good morning. 20 Curt Masser, 107th District, Northumberland, 21 Columbia, and Montour counties. 22 REPRESENTATIVE KILLION: Good 23 morning. Tom Killion, Delaware County. 24 REPRESENTATIVE MARSHALL: Good 25 morning. Jim Marshall, 14th District, parts 7 1 of Beaver, parts of Butler County. 2 REPRESENTATIVE MUSTIO: Good morning. 3 Mark Mustio, 44th District, Allegheny County. 4 REPRESENTATIVE MILLARD: Good 5 morning. David Millard, 109th District, 6 Columbia County. 7 REPRESENTATIVE PEIFER: Good morning. 8 Mike Peifer, 139th, which includes Pike and 9 Wayne counties. 10 REPRESENTATIVE DUNBAR: Good morning. 11 George Dunbar, Westmoreland County, 56th 12 District. 13 REPRESENTATIVE SONNEY: Good morning. 14 Curt Sonney, 4th District, Erie County. 15 REPRESENTATIVE KAMPF: Good morning. 16 Warren Kampf, 157th District, Chester and 17 Montgomery counties. 18 REPRESENTATIVE GREINER: Good 19 morning, everyone. Keith Greiner, 43rd 20 District, and I'm Lancaster County. 21 REPRESENTATIVE DAY: Good morning, 22 everyone. Gary Day, 187th District, Lehigh 23 and Berks counties. 24 REPRESENTATIVE EVERETT: Garth 25 Everett, 84th District, Lycoming and Union 8 1 counties. 2 REPRESENTATIVE KELLER: Good morning. 3 Fred Keller, Union and Snyder counties, 85th 4 District. 5 REPRESENTATIVE GROVE: Good morning. 6 Seth Grove, 196th District, York County. And 7 this cup is for you, Glen. 8 MAJORITY CHAIRMAN ADOLPH: Okay. 9 Thank you very much. 10 And after we hear from the 11 testifiers, I will acknowledge the presence of 12 some other members that have joined us. Okay. 13 But this morning, we will hear from 14 the public schools Public School Employees' 15 Retirement System and as well as State 16 Employees’ Retirement System. 17 I would be remiss if I did not 18 specifically welcome an old friend, an old 19 member of this committee, not in age, but a 20 very bright individual who, during his 21 legislative career, took on his own as one of 22 his issues the pension systems. And we 23 certainly appreciate his leadership in that 24 issue. And we certainly miss him on the 25 Appropriations Committee. 9 1 Welcome back, Glen Grell. 2 MR. GRELL: Thank you, Mr. Chairman. 3 MAJORITY CHAIRMAN ADOLPH: Each year 4 during this time, we are reminded about the 5 need for pension reform. Pennsylvania’s 6 facing a pension liability of over 50 billion 7 dollars. Our rating agencies continue to cite 8 pension cost as a concern of our bond rating. 9 This committee has talked about the structural 10 deficit over the last couple weeks, and it’s 11 important that we recognize the reason that 12 our expenses are outpacing our revenues, and 13 as a result, our ballooning pension costs. 14 Therefore, I’m very much looking for 15 this hearing, looking for some suggestions, 16 looking for some professional advice as we 17 move on with the budget process. 18 Ladies first. 19 MS. VOGLER: Okay. Good morning. 20 MAJORITY CHAIRMAN ADOLPH: Good 21 morning. 22 MS. VOGLER: I’m Melva Vogler, and 23 I’m currently the board chair for PSERS. I am 24 elected by the retired members of our system. 25 And I was formally a math teacher at 10 1 Wallenpaupack area in Representative Peifer's 2 district. 3 I have with me today Glen Grell, as 4 you already noted, our new executive director. 5 And we appreciate having him. I also have Jim 6 Grossman, our chief investment officer. 7 They are prepared to answer your 8 questions, and should they need some expertise 9 help, we have a large group with us that can 10 provide that assistance. 11 I am pleased to present this year, in 12 addition on our board book, this summary. I 13 hope that you will find it very interesting. 14 I'm very proud of it. I can't claim any 15 credit at all for its production. That goes 16 to Glen Grell and the staff. 17 So, we will attempt to answer 18 whatever questions you have for us, and I'm 19 going to give the microphone to our experts. 20 Thank you. 21 MAJORITY CHAIRMAN ADOLPH: Okay. I 22 think possibly, Mr. Fillman would like to have 23 some opening comments, and then because 24 these -- the questions are going to be 25 directed to either PSERS or to SERS so, we're 11 1 going back and forth, but I’d like to hear 2 from the heads of both agencies. 3 MR. FILLMAN: Thank you, 4 Mr. Chairman. My name’s Dave Fillman. I’m 5 the chairman of the SERS board, as of August 6 of this year. I’ve been on the board since 7 2001, appointed by Governor Schweiker at that 8 time. 9 I echo the chairwoman’s questions and 10 comments as far as us being able to answer as 11 many questions as you can in these challenging 12 times, as we hope to continue with a — a good 13 effort by this board and the folks with me, 14 David Durbin, who’s the chief executive 15 officer, and Tom Brier, the chief investment 16 officer, and in couple of years, both of our 17 funds will be a hundred years old.