COMPREHENSIVE ANNUAL FINANCIAL REPORT for the Fiscal Year Ended June 30, 2018 The USS New Jersey (BB-62) (“Big J” or “Black Dragon”[5]) is an Iowa-class battleship. The USS New Jersey earned more battle stars for combat actions than the other four completed Iowa-class battleships. The USS New Jersey was decommissioned for the last time in 1991 (after serving a total of 21 years in the active fleet), having earned a Navy-Unit Commendation for service in Vietnam and 19 battle and campaign stars for combat operations during World War II, the Korean War, the Vietnam War, the Lebanese Civil War, and service in the Persian Gulf. The ship was donated to the Home Port Alliance in Camden, New Jersey, and began its career as a museum ship on October 15 2001. Pensions & Benefits State of New Jersey Department of the Treasury Division of Pensions & Benefits OUR MISSION. To provide benefits and services that meet the needs of our clients and others we are committed to serve, through our efficient and responsive workforce OUR VISION . that foster improvement of our organization through teamwork, motivation, and com- WE will achieve satisfaction through equi- munication among staff. table, effective responsive service, and clear and accessible communications that meet OUR GOALS . the needs of our clients. Customer Service — WE will encourage and support an accom- plished workforce that is knowledgeable, TO create and maintain a customer-focused flexible, technically proficient, and commit- work environment that anticipates and ted to excellence. meets client needs. WE will be committed to working with ex- Staff — ecutive and legislative agencies and govern- TO have a full complement of staff that is ing boards to improve the design and imple- well trained, undergoes continual develop- mentation of the benefit programs. ment, and is motivated to provide benefit WE will support technologies that simplify services effectively and efficiently in a cus- procedures and improve services, manage tomer friendly manner. our resources in a responsible and creative Technology — manner, and hold contracted service pro- TO have an integrated, easily maintained viders to high standards. and modified, information processing sys- WE will work with participating employers tem that supports the efficient and effective to enhance their role in the administration delivery of services. of benefits for their employees through inte- grated technology that allows them to access Planning — and process benefit information directly. TO have an effective planning system that facilitates improvement, anticipates OUR VALUES . change, and properly focuses resources on priorities. WE are customer-focused, recognizing Benefits Processing — each client individually. TO provide benefits to clients in a timely WE acknowledge as our greatest asset our and efficient manner. knowledgeable, hardworking, dedicated, and caring staff. Advocacy— WE are financially responsible in the ad- TO help structure a well-funded system of ministration, oversight, and delivery of our benefits that meets the needs of public em- benefit programs. ployees and employers. WE are committed to providing quality, Oversight and Compliance— timely, accurate, efficient, and cost-effective TO administer programs with clear and services. consistent policies and procedures and pro- WE are committed to creating and devel- vide oversight to safeguard fund assets and oping a quality work environment using ensure benefit entitlement. state-of-the-art technologies, and processes NEW JERSEY DIVISION OF PENSIONS & BENEFITS 63RD COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018 PHILIP D. MURPHY Governor ELIZABETH MAHER MUOIO State Treasurer JOHN MEGARIOTIS Acting Director State of New Jersey l Department of the Treasury Division of Pensions & Benefits P.O. Box 295 Trenton, NJ 08625-0295 (609) 292- 7524 PROGRAMS ADMINISTERED BY THE DIVISION OF PENSIONS & BENEFITS PERS Public Employees’ Retirement System TPAF Teachers’ Pension and Annuity Fund PFRS Police and Firemen’s Retirement System SPRS State Police Retirement System JRS Judicial Retirement System DCRP Defined Contribution Retirement Program ABP Alternate Benefit Program POPF Police Officers’ Pension Fund CPFPF Consolidated Police and Firemen’s Pension Fund NJSEDCP New Jersey State Employees Deferred Compensation Plan SACT Supplemental Annuity Collective Trust ACTS Additional Contributions Tax-Sheltered Program CPF Central Pension Fund PAF Pension Adjustment Fund UCTDSE Unemployment Compensation and Temporary Disability for State Employees SHBP State Health Benefits Program SEHBP School Employees’ Health Benefits Program PDP Prescription Drug Plans EDP Employee Dental Plans Tax$ave New Jersey State Employees’ Tax Savings Program: Premium Option Plan, Unreimbursed Medical Flexible Spending Account, and Dependent Care Flexible Spending Account Commuter Tax$ave New Jersey State Employees’ Commuter Tax Savings Program LTC Long Term Care Insurance Plan INDEPENDENT AUDITOR KPMG LLP — 51 John F. Kennedy Parkway, Short Hills, NJ 07078-2702 ACTUARIAL REPORTS Buck Global, LLC — 500 Plaza Drive, Secaucus, NJ 07096-1533 Milliman — 1550 Liberty Ridge Drive, Suite 200, Wayne, PA 19087-5572 AON Hewitt — 400 Atrium Drive, Somerset, NJ 08873 4 x New Jersey Division of Pensions & Benefits TABLE OF CONTENTS Introductory Section Letter of Transmittal ................................................................................................................................................................................. 11 All in a Year’s Work (Accomplishments in 2018) .........................................................................................................................................13 Organization ............................................................................................................................................................................................ 14 Organization — Board of Trustees ............................................................................................................................................................ 17 Significant Legislation .............................................................................................................................................................................19 Scope of Operations ................................................................................................................................................................................. 21 Membership .............................................................................................................................................................................................25 Financial Section Index ........................................................................................................................................................................................................33 Independent Auditors’ Report .................................................................................................................................................................35 Management’s Discussion and Analysis (Unaudited) ................................................................................................................................ 37 Basic Financial Statements: Statement of Fiduciary Net Position — Fiduciary Funds ........................................................................................................................44 Combining Statement of Fiduciary Net Position — Fiduciary Funds — Pension Trust Funds and Other Postemployment Benefit Plan.................................................................................................................................. ... 45 Statement of Changes in Fiduciary Net Position — Fiduciary Funds ......................................................................................................46 Combining Statement of Changes in Fiduciary Net Position — Fiduciary Funds — Pension Trust Funds and Other Postemployment Benefit Plan ..................................................................................................................................................... 47 Notes to Financial Statements...................................................................................................................................................... ....... 48 Supplementary Schedules: Required Supplementary Information (Unaudited) Defined Benefit Pension Plans: 1 Schedule of Changes in Net Pension Liability and Related Ratios .................................................................................................82 2 Schedule of Employer Contributions ............................................................................................................................................89 3 Schedule of Investment Returns — Annual Money-Weighted Rate of Return, Net of Investment Expense ....................................... 94 Defined Benefit Other Postemployment Benefit Plan: 4 Schedule of Changes in Net OPEB Liability and Related Ratios ....................................................................................................95 5 Schedule of Investment Returns — Other Postemployment Benefit Plan — Annual Money-Weighted Rate of Return, Net of Investment Expense ..........................................................................................................................................................96