June 16, 2020

Legislative Session
Day 31
Report Snapshot

Committee Approves Alternative Investments for TRS

Upcoming Schedule

Wednesday, June 17 - Legislative Day 32

Senate Appropriations, 8 a.m., 341 CAP

Senate Education & Youth, 2:15 p.m., 307 CLOB

House Education, 2:30 p.m., 406 CLOB

Senate Retirement, 4:45 p..m., Mezz 1

Thursday, June 18 – Legislative Day 33

Public Finance & Policy Subcommittee, House Ways & Means, 12 p.m., 506 CLOB

Senate Finance, 2:15 p.m., 450 CAP
Committee Approves Alternative Investments for TRS

Highlights:

  • TRS would be able to allocate up to five percent of funds to alternative investments if SB 294 becomes law.

  • TRS leadership supports SB 294 due to positive returns from alternative investments seen by other public retirement systems in Georgia. 


The House Retirement Committee, chaired by Rep. Tommy Benton (R-Jefferson), approved SB 294 by Sen. Ellis Black (R-Valdosta) at its Tuesday meeting. If the bill becomes law, the Teachers Retirement System (TRS) would be able to direct up to five percent of funds in alternative investments. Black explained that other Georgia public retirement systems have been able to invest up to five percent of their funds in alternative investments for several years. Returns from those alternatives have been higher than returns from equities and bonds, TRS's current investments.

Responding to a question from Rep. Dominic LaRiccia (R-Douglas), Black reported that feedback to the bill from teachers has been mixed. PAGE Director of Legislative Services Margaret Ciccarelli addressed the committee and reiterated Black’s statement that educator enthusiasm for alternative investments has historically been mixed, adding that PAGE has expressed concerns about alternative investments in the past. These investments can be more volatile than equities and bonds, though other Georgia public employee retirement plans already invested in alternatives have promising returns which outpace other investments. Ciccarelli cautioned that, should HB 830 by Rep. Benton pass the Senate, the cap on alternative investments would be raised to 10 percent, a change which would make many TRS members uncomfortable. Benton responded that he added TRS to a substitute version of HB 830 and capped TRS alternative investments at 5 percent, while allowing other public retirement systems to invest up to 10 percent. Ciccarelli concluded her comments by expressing confidence in TRS leadership and thanking the committee for allowing her to discuss pros and cons of SB 294.

Buster Evans, executive director of the Teacher Retirement System, spoke favorably of the bill, citing the good returns from alternative investments that the Employee Retirement System (ERS) has invested in for several years. Georgia’s TRS system is one of the few public employee retirement systems in the country not investing in alternative investments according to Evans. He explained that it is unlikely that TRS will invest the full five percent in alternatives that SB 294 would allow, citing that ERS currently invests three percent of its funds.

Benton closed the meeting by thanking members of the committee for their work in the 2020 session, hinting that the committee is unlikely to meet again this session.


-Josh Stephens
Claire Suggs
Senior Education Policy Analyst
csuggs@pageinc.org
Josh Stephens
Legislative Affairs Specialist
jstephens@pageinc.org
Margaret Ciccarelli
Director of Legislative Services
mciccarelli@pageinc.org