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Board Regular MeetingSchedule Wednesday, December 11, 2019 9:00 AM — 1:00 PM CSTVenue TRS Board Room, 5th Floor, 2500 N Lincoln Blvd., Oklahoma

City, Okla.Organizer Phyllis Bennett

Agenda

1. Roll Call for Quorum

2. Discussion and Possible Action on Approval of Minutes from Octobermeetings:a. October 21 and 22, 2019, Board Special Meetingb. October 23, 2019, Board Regular Meeting

bd-2.a Mins-SpecialMtg-10-21&22-2019-final.docx 1 bd-2.b Mins-BdRegMtg-10-23-19-final.docx 7

3. Discussion and Possible Action on Investment Committee Report

3.1. Discussion and Possible Action on Rebalancing Plan

bd-3.1 Rebalance Plan.pdf 13

3.2. Discussion and Possible Action to Issue an RFP for Master Custody,Security Lending, Commission Recapture and Transition ManagementServices

bd-3.2 Master Custodian RFP (Final).pdf 14

3.3. Discussion and Possible Action on Amendments to Limited PartnershipAgreement and Fee Schedule with L&B Realty for the Golden Driller Fund

3.4. Discussion and Possible Action on Proposal for Additional Commitment toAmerican Realty Fund

bd-3.4 American Realty Follow-on Investment - Copy.pdf 32

3.5. Discussion and Update on Open-End Non-Core Real Estate RFP

3.6. Discussion and Possible Action on Investment Consultant Monthly Report

bd-3.6 AndCo Monthly Report-Nov2019.pdf 33

3.7. Discussion and Possible Action on Chief Investment Officer Report

bd-3.7 CIO Report December.pdf 52

4. Discussion and Possible Action on Possible Assignment of InvestmentManager Agreement with Geneva Capital Management, LLC (Geneva JanusHenderson) to Estancia Capital Management, LLC

bd-4 Geneva Capital Ownership Change Memo.pdf 57 bd-4 Geneva client letter Dec 2019.pdf 58

5. Discussion and Possible Action on Committee Reports:a. Audit Committee: Discussion and Possible Action on Stinnett & Associates'Internal Audit Plan Update, Prior Audit Follow-up, and Accounts Payable andP-Card Reviewb. Governance Committee:

i. Discussion and Possible Action on Amendments to Vision Statementii. Discussion and Possible Action on Amendments to Board Policy Manual

Pursuant to Previous Adoption of CY 2020 Meeting Schedule

bd-4.a Stinnett Audit Presentation-120319-FINAL.pdf 59 bd-4.b.i Chapter 2 - Mission & Vision Statements.pdf 75 bd-4.b.ii-1 Board Mtgs Schedule.pptx 76 bd-4.b.ii-2 Chapter 7.pdf 78

6. Discussion and Possible Action to Renew CY 2020 Tax Guarantor Agreementwith KPMG (Taiwan)

7. Discussion and Possible Action on Eligibility of And Notification to a QualifyingStatewide Organization Representing Retired Educators RegardingAppointment of Non-Voting Trustee Pursuant to 70 O.S. Section 17-106(2)(n)and OAC 715:1-1-19

bd-6. RPOE Appt Letter CY2020[1415].pdf 87

8. Discussion and Possible Action to Authorize Staff to Initiate AcquisitionProcess for Pension Administration Software System

bd-7 PensionAdminSoftwareApprovalMemoDec2019.pdf 88

9. Discussion and Possible Action on Agency Reports

9.1. Client Services

bd-8.1 a.NovClientServicesBdRpt.pdf 89 bd-8.1 b.DecClientServicesBdRpt.pdf 91

9.2. Human Resources

bd-8.2 HR Status Report 2019-12-11.docx 93

9.3. Finance:a. Employer Reportingb. CFO Report

bd-8.3-a Employer Reporting.pdf 94bd-8.3-b CFO Report.pdf 95

9.4. Deputy Director of Operations

bd-8.4 DepDirRpt2019.docx 103

9.5. General Counsel

GC Report Dec (1).docx 104

9.6. Executive Director

bd-9.6 ExecDirRpt-10-23-19to12-9-19.pdf 105

10. Questions and Comments from Trustees

11. New Business

12. Adjournment

2500 N. Lincoln Blvd., 5th Floor, Oklahoma City, OK

Next Meetings:Investment Committee - 2 p.m. January 21, 2020Board Regular Meeting - 9 a.m. January 22, 2020

1

MEETING MINUTES

OCTOBER 21 AND 22, 2019

BOARD OF TRUSTEES REGULAR MEETING

TEACHERS’ RETIREMENT SYSTEM OF OKLAHOMA

A special meeting of the Board of Trustees of the Teachers’ Retirement System of Oklahoma was called to

order by Vernon Florence, Chairman, at 12:00 p.m. October 21, 2019, in the Parkview West room at the

Doubletree Warren Place, 6110 S. Yale, Tulsa, Oklahoma. The meeting notice and agenda were posted in

accordance with 25 O.S. Section 311(A)(11).

TRUSTEES PRESENT:

Vernon Florence, Chairman

Roger Gaddis, Vice-Chairman

Judie Harris, Secretary

Rod Boles

Steve Massey

Chris Rector *

Mathangi Shankar

Stephen Streeter *

Drew Williamson *

Greg Winters *

TRUSTEES ABSENT:

Tim Allen

Lisa Henderson

Michael Kellogg

Brandy Manek

Brandon Meyer

*Denotes late arrival or early departure.

ITEM 1 - ROLL CALL FOR QUORUM: Chairman Florence asked the recording secretary to call roll to

determine if a quorum was present. Trustees responding were Mr. Boles, Chairman Florence, Mr. Gaddis, Ms.

Harris, Ms. Shankar, and Mr. Massey. A quorum was not present.

Dr. Winters arrived at 12:03 p.m.

Mr. Rector arrived at 12:04 p.m.

ITEM 2 – INTRODUCTION AND SHARING OF EXPERIENCES: Chairman Florence pointed out that

the Investment Committee items would be addressed tomorrow in the second half of this Special Board

meeting, and the Regular Board meeting will convene 9 a.m. Wednesday, October 23. TRS Executive Director

Tom Spencer thanked Trustees for their sacrifices to their work and personal lives to attend all or part of the

Board Retreat meetings. He acknowledged that being a part of TRS’ Board requires a lot of reading and

discussion to be able to take action.

As an ice breaker, Mr. Spencer asked Trustees and staff to share their experiences related to one of three topics.

Mr. Williamson arrived at 12:45 p.m.

Mr. Streeter arrived at 12:53 p.m.

The next item was taken out of order

ITEM 1 – ROLL CALL FOR QUORUM: Chairman Florence asked the recording secretary to call roll again

to determine if a quorum was now present. Trustees responding were Mr. Boles, Chairman Florence, Mr.

Gaddis, Ms. Harris, Ms. Shankar, Mr. Massey, Mr. Rector, Mr. Streeter, Mr. Williamson and Dr. Winters. A

quorum was present.

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ITEM 3 – IDENTIFICATION OF GROUND RULES: Mr. Spencer explained that this Board Retreat is

more educational than past Retreats and will include several educational presentations focusing on important

issues.

ITEM 4 – DISCUSSION OF EACH DIVISIONS’ FUNCTION, SUCCESSES AND CHALLENGES: Mr.

Spencer introduced TRS directors to give presentations about their respective division’s function, successes and

challenges.

• Dixie Moody, TRS’ Client Services Director, described responsibilities of her division that is staffed by

23 full-time employees. In reply to questions by Mr. Gaddis, Ms. Moody explained there is enough staff

as positions are covered when someone is out of office; however, some of her staff members are new to

positions that can take up to 5 years to be fully trained. There were discussions about ways to educate

teachers about TRS early in their careers, how to find former members that left money in their inactive

accounts, and TRS’ 403(b) fund.

• Mr. Santos presented the Finance division’s report on behalf of Chief Financial Officer Sam Moore who

could not attend today’s meeting. He outlined the responsibilities of Finance’s 7 full-time employees,

and the challenges Finance faces. Two of those challenges are keeping up with State rules regulations,

and implementation of a new pension administration software.

• Mr. Spencer presented the Human Resources report on behalf of Human Resources Director Kim Bold

who could not attend today’s meeting. He said Ms. Bold is the sole HR employee and pointed out her

many responsibilities including the process of filling a vacancy at a State agency. One challenges HR

faces currently is that there are 5 employees eligible to retire or are within 1 year of eligibility, and 7 are

eligible for early retirement or are within 1 year of eligibility.

• Kirk Stebbins, TRS Chief Investment Officer, outlined his division’s roles and responsibilities that he

shares with one employee. He outlined their projects and challenges including determining the fund’s

optimal asset allocation, and monitoring multiple investment managers. Joe Cappello, TRS Senior

Investment Officer, updated Trustees on Meketa, TRS’ new private market back-office administration

firm, the upcoming asset liability study, and plans to bring the real estate allocation from 7.5% back to

9%.

A break was taken from 2:37 to 2:57 p.m.

• Mr. Santos presented “ALICE Wants to Retire; The Need for a New Pension Administration System”

which included the history of the current pension administration system, problematic issues experienced

with ALICE, how it works now, and the preferred functions in a new system.

• Ms. Green reviewed 12 areas of law she encounters as TRS’ General Counsel, and various ways they are

presented for members, investments and administration. She shared some specific cases and a list of

upcoming projects that will require legal work. There was discussion about disability retirements.

The next item taken out of order

ITEM 9 – DISCUSSION ON RECENT SUCCESSES, CHALLENGES AND GOAL FROM 2017

BOARD RETREAT: Mr. Spencer reviewed TRS’ successes that happened between the previous Board

Retreat in February 2017, and today.

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ITEM 5 – DISCUSSION, EXPLANATION AND DEMONSTRATION OF TRS BENEFIT

CALCULATIONS: Ms. Moody presented a PowerPoint to explain how TRS determines when a member

qualifies for retirement; the retirement benefit formula; five different retirement options; steps to prepare for

retirement; and post-retirement employment. A question and answer period followed.

ITEM 6 – DISCUSSION AND PRESENTATION OF OKLAHOMA PENSION LEGISLATION

ACTUARIAL ANALYSIS ACT (OPLAAA), TRS HISTORY AND COLA HISTORY: Mr. Spencer

reviewed the history and features of OPLAAA, which passed in SB 1894 in 2006. He pointed out that the copy

of the Winter 2018 Advisor in today’s agenda packet included some interesting facts from TRS’ 75-year

history. He also referred to an old document he found that listed TRS’ COLAs from 1947 to 2008. There was

some discussion about the history of COLAs.

Chairman Florence recessed the Special Meeting at 4:53 p.m. Monday, October 21, 2019

The Special Meeting reconvened at 9 a.m. Tuesday, October 22, 2019

TRUSTEES PRESENT:

Rod Boles

Vernon Florence

Roger Gaddis

Judie Harris

Mathangi Shankar*

Michael Kellogg

Brandon Meyer*

Steve Massey

Chris Rector

Stephen Streeter

Drew Williamson

Greg Winters

TRUSTEES ABSENT:

Lisa Henderson

Brandy Manek

Tim Allen

TRS STAFF PRESENT:

Tom Spencer, Executive Director

Sarah Green, General Counsel

John Santos, Deputy Director of Operations

Dixie Moody, Director of Client Services

Kirk Stebbins, Chief Investment Officer

Joe Cappello, Sr. Investment Officer

Phyllis Bennett, Executive Assistant

OTHERS PRESENT:

Doug Anderson, AndCo Consulting

Peter Brown, AndCo Consulting

Jack Evatt, AndCo Consulting

*Denotes late arrive or early departure

ITEM 7 – DISCUSSION AND PRESENTATION OF FIDUCIARY DUTIES OF TRS TRUSTEES: Ms.

Green reviewed her report on fiduciary considerations, Board policy considerations, ethical and fiduciary

conduct, Oklahoma Ethics Commission rules, Trustee liability, and related issues. There were questions and

discussions about insider trading, Board responsibilities, and liability insurance.

Mr. Meyer arrived at 9:10 a.m.

Page 3 of 107

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ITEM 8 – DISCUSSION AND REVIEW OF TRUSTEE SURVEY ON INVESTMENT COMMITTEE

AND BOARD MEETING STRUCTURE: Ms. Green reviewed the questions, responses and comments in a

recent survey of the Board of Trustees.

A break was taken from 10:20 a.m. to 10:36 p.m.

Ms. Green continued reviewing the Trustee Survey. There were additional comments and discussion about the

structure and scheduling of Board meetings.

Mr. Meyer left at 10:40 a.m.

A motion made by Dr. Winters with a second made by Mr. Streeter that for Calendar Year 2020, Board Regular

meetings and Investment Committee meetings will be held the first two months of each quarter, taking off the

third month of the quarter, and having the Investment Committee meetings begin at 2 p.m. carried by a

unanimous voice vote. Trustees responding were Mr. Boles, Chairman Florence, Mr. Gaddis, Ms. Harris, Ms.

Shankar, Mr. Kellogg, Mr. Rector, Mr. Streeter, Mr. Williamson and Dr. Winters.

There were additional discussions after Ms. Green reviewed the remaining survey questions.

ITEM 9 – DISCUSSION ON RECENT SUCCESSES, CHALLENGES AND GOALS FROM 2017

BOARD RETREAT: Mr. Spencer said he reviewed successes yesterday. He reviewed the challenges to TRS

and how some are being addressed. He also reviewed TRS’ goals from the 2017 Board retreat.

ITEM 10 – DISCUSSION AND POSSIBLE ACTION ON REVIEW OF MISSION & VISION

STATEMENTS: Ms. Green said Board policy requires the Board to review TRS’ Mission Statement the third

quarter every other year. Mr. Spencer read the agency Mission Statement, explained its importance and invited

Trustees to share ideas if they think it needs to be changed. He also read the agency vision statement and said he

has concerns about security as it relates to providing clients on-demand access to their personal financial

information. Ms. Green added that the Vision Statement should include changes from “clients” to “members” to

reflect TRS statutes and rules. Some trustees shared their ideas on the Vision Statement and sharing information

with members.

A lunch break was taken from 12:00 to 1:00 p.m.

In response to an earlier question by Mr. Gaddis, Ms. Green explained the Board policy on vendors buying

meals for Trustees or staff.

Mr. Spencer requested that he, Ms. Green, Mr. Stebbins and interested Trustees meet in the near future to

discuss possible amendments to the vision statement and to present any amendments to the Board at the

December meeting. Chairman Florence agreed. There was discussion about teachers’ benefits in other states and

communicating with teachers and support personnel.

ITEM 11 – DISCUSSION AND REVIEW OF CURRENT TRS FY2020 – 2024 STRATEGIC PLAN: Mr.

Spencer presented two reports on pension’s administrative costs. He reviewed TRS’ current Strategic Plan’s

values and behaviors, goals and projects.

11.1 DISCUSSION, BRAINSTORM AND PRIORITIZE POTENTIAL GOALS: There was discussion on

various goals of the agency.

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11.2 DISCUSSION TO IDENTIFY RESPONSIBILITIES FOR PREPARING STRATEGIES AND

ACTION STEPS FOR EACH GOAL: There was discussion about how best to communicate TRS benefits to

TRS members throughout the state.

11.3 DISCUSSION AND POSSIBLE ACTION TO ADOPT ANY AMENDMENTS OR ADDITIONS TO

THE STRATEGIC PLAN: No action was taken.

A break was taken from 2:11 p.m. to 2:29 p.m.

ITEM 12 – DISCUSSION AND POSSIBLE ACTION REGARDING TERMINATION OF EPOCH

INVESTMENT PARTNERS AND RETENTION OF NORTHERN TRUST TO PERFORM

TRANSITION MANAGEMENT SERVICES FOR EPOCH INTERNATIONAL PORTFOLIO PRIOR

TO THE CALENDAR YEAR END: Investment Committee Chairman Roger Gaddis asked Mr. Stebbins to

present this item. Mr. Stebbins explained that Northern Trust will help TRS transition out of Epoch

International Small Cap. Doing so, he said will not make small cap allocations under target.

Ms. Green reminded Trustees that this is a Special meeting and not an Investment Committee meeting and any

actions we take require a vote of the full Board. Mr. Gaddis added that any Trustee, not just those in the

Investment Committee, may make a motion on these items and these items will not be presented at tomorrow’s

Regular Board meeting.

A motion made by Mr. Kellogg with a second made by Mr. Williamson to terminate Epoch International Small

Cap and appoint Northern Trust as transition manager carried by unanimous voice vote. Trustees responding

were Mr. Boles, Chairman Florence, Mr. Gaddis, Ms. Harris, Mr. Kellogg, Mr. Rector, Ms. Shankar, Mr.

Streeter, Mr. Williamson and Dr. Winters.

Ms. Shankar left at 3:07 p.m.

ITEM 13 – DISCUSSION AND POSSIBLE ACTION TO AUTHORIZE INVESTMENT

CONSULTANT AND STAFF TO ISSUE AN RFP FOR OPEN-END NON-CORE REAL ESTATE

INVESTMENT MANAGEMENT/FUNDS: Investment Consultant to the Board Peter Brown of AndCo

Consulting reviewed the Real Estate portfolio and said TRS Real Estate is under allocated. He presented an RFP

for an open-end private equity non-core real estate manager(s) and gave a probable time table of events if the

RFP is issued. He said there could be as many as 20 respondents. Mr. Anderson of AndCo Consulting

commented on the makeup of the RFP. There was discussion on Real Estate markets.

A motion made by Mr. Williamson with a second made by Mr. Streeter to authorize issuing an RFP for an

open-end non-core real estate investment management carried by unanimous voice vote. Trustees responding

were Mr. Boles, Chairman Florence, Mr. Gaddis, Ms. Harris, Mr. Kellogg, Mr. Rector, Mr. Streeter, Mr.

Williamson and Dr. Winters.

Mr. Brown continued reviewing stats and the makeup of the Real Estate funds in TRS’ portfolio.

ITEM 14 – DISCUSSION AND POSSIBLE ACTION ON INVESTMENT CONSULTANT

QUARTERLY FUND REPORT AND QUARTERLY 403(B) REPORT: Mr. Anderson reviewed the market

environment and the investment performance of TRS’ total fund for the quarter ending September 30, 2019.

The total fund was at $17B, up 2.7%. Mr. Anderson reviewed asset allocations, and returns and losses in all

segments. He gave a brief presentation on the investment performance of TRS’ 403(b) fund for the quarter

ending September 30, 2019. The 403(b) fund decreased $2.43M from the previous quarter.

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ITEM 15 – DISCUSSION ON CHIEF INVESTMENT OFFICER REPORT: Mr. Stebbins presented a

graph showing how allocations will look after the latest transition. Mr. Cappello reviewed the managers’

allocations in the current portfolio vs policy targets, reviewed Northern Trust’s post-trade summary and

performance of TRS’ total fund September 24 through October 14, 2019. Mr. Stebbins presented a rolling

period analysis of the Mid Cap portfolio from December 31, 2998, thorough September 30, 2019. There was

some discussion about International Equity.

ITEM 16 – QUESTIONS AND COMMENTS FROM TRUSTEES: Mr. Spencer reminded Trustees and

staff to board the bus at 6:15 p.m. for an off-site dinner.

ITEM 17 – NEW BUSINESS: There was none.

ITEM 18 – ADJOURNMENT:

A motion made by Mr. Gaddis with a second made by Dr. Winters to adjourn the meeting at 4:25 p.m. carried

by a unanimous voice vote. Trustees responding were Mr. Boles, Chairman Florence, Mr. Gaddis, Ms. Harris,

Mr. Kellogg, Mr. Rector, Mr. Streeter, Mr. Williamson, and Dr. Winters.

By:

__________________________________________


ATTEST:

By:

__________________________________________

Judie Harris

Page 6 of 107

1

MEETING MINUTES

OCTOBER 23, 2019

BOARD OF TRUSTEES REGULAR MEETING

TEACHERS’ RETIREMENT SYSTEM OF OKLAHOMA

A regular meeting of the Board of Trustees of the Teachers’ Retirement System of Oklahoma

was called to order by Vernon Florence, Chairman, at 9:00 p.m. October 23, 2019, in the

Parkview West room at the Doubletree Warren Place, 6110 S. Yale, Tulsa, Oklahoma. The

meeting notice and agenda were posted in accordance with 25 O.S. Section 311(A)(11).

TRUSTEES PRESENT:


Roger Gaddis, Vice-Chairman

Judie Harris, Secretary

Rod Boles

Mr. Kellogg

Brandy Manek

Steve Massey

Brandon Meyer

Chris Rector

Greg Winters

TRUSTEES ABSENT:

Tim Allen

Lisa Henderson

Mathangi Shankar

Stephen Streeter

Drew Williamson

TRS STAFF PRESENT:


Sarah Green, General Counsel

John Santos, Deputy Director of Operations

Dixie Moody, Director of Client Services

Kirk Stebbins, Chief Investment Officer

Joe Cappello, Sr. Investment Officer

Phyllis Bennett, Executive Assistant

OTHERS PRESENT:

Ryan Falls, GRS Retirement Consulting

Vanessa Dutton, Eide Bailly

Doug Anderson, AndCo Consulting

Peter Brown, AndCo Consulting

Jack Evatt, AndCo Consulting

Don Hertzler, TMREA

Ken Yates, TMREA

Eddie Creekpaum, TMREA

Terry Ingmire, OREA.

Lynn Stockley, OREA & TMREA

Melissa Provezano, State Representative

John Waldron, State Representative

ITEM 1 - ROLL CALL FOR QUORUM: Chairman Florence asked the recording secretary to

call roll to determine if a quorum was present. Trustees responding were Mr. Boles, Chairman

Florence, Mr. Gaddis, Ms. Harris, Mr. Kellogg, Ms. Manek, Mr. Massey, Mr. Meyer, Mr.

Rector, and Dr. Winters. A quorum was present.

ITEM 2 – DISCUSSION AND ACTION ON APPROVAL OF MINUTES FROM

SEPTEMBER 18, 2019, BOARD REGULAR MEETING: A motion made by Dr. Winters

with a second made by Mr. Boles to approve the minutes of the September 18, 2019, Board of

Trustees Regular Meeting carried by a unanimous voice vote. Trustees responding were Mr.

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Boles, Chairman Florence, Mr. Gaddis, Ms. Harris, Mr. Kellogg, Ms. Manek, Mr. Meyer, Mr.

Rector, and Dr. Winters.

ITEM 3 –.DISCUSSION AND POSSIBLE ACTION ON COMMITTEE REPORTS

a. Audit: Audit Committee Chairman Dr. Winters said the financial statement audit will be

presented later in this meeting.

b. Governance: Governance Committee Chairman Mr. Kellogg had nothing to report this

month.

ITEM 4 – DISCUSSION AND POSSIBLE ACTION ON FY 2019 ACTUARIAL REPORT:

Ryan Falls of Gabriel Roeder Smith said he will give two presentations. The first is TRS’ annual

actuarial valuation report for FY 2019 and the second is the experience study. He pointed out the

slight changes from FY 2018 to FY 2019. He said the funding period was 14 years in FY 2018

and remained 14 years in FY 2019 due to investments not meeting expectations of 7.5%. The

greater than expected pay increase to active teachers increased retirement benefits which

increased the system’s obligation. The bigger teacher payroll didn’t cause a negative impact

because it increased contributions and there were fewer retirements than expected. Mr. Falls

reviewed variables to calculate actuarial results; financial reporting; and projections.

The second half of Mr. Fall’s report was presented after Item 5.

ITEM 5 – DISCUSSION AND POSSIBLE ACTION TO APPROVE THE AUDITED

FINANCIAL STATEMENTS FOR FY 2019: Vanessa Dutton of Eide Bailly distributed the

bound Audited Financial Statement and required communication for FY 2019. She said they

issued an unmodified, clean opinion. In comparing FY 2019, 2018 and 2017, TRS had an

increase in its net position in FY 2019, but it decreased in comparison to prior years mainly due

to investment income. The rate of return was about 9% FY 2018 and it decreased to just under

5% FY 2019. The Independent Auditor’s Report on Internal Control over Financial Reporting

and Compliance and Other Matters Based on an Audit of Financial Statements Performed in

Accordance with Government Auditing Standards states the auditor did not identify any

deficiencies in internal control that they consider to be material weaknesses. The one uncorrected

misstatement was in the anticipated management estimate but it is immaterial to the plan overall.

A motion made by Dr. Winters with a second made by Ms. Harris to accept the Audited

Financial Statements for FY 2019 as presented carried by a unanimous voice vote. Trustees

responding were Mr. Boles, Chairman Florence, Mr. Gaddis, Ms. Harris, Mr. Kellogg, Ms.

Manek, Mr. Meyer, Mr. Rector, and Dr. Winters.

ITEM 4 (Continued): Mr. Falls presented slides to explain TRS’ past and upcoming experience

studies which are done every 5 years. He reviewed the purpose of valuation, the funding

equation, how assumptions factor in, the purpose and process of the Experience Study. There

was discussion about various factors used to make assumptions and the time it will take to

complete the experience study.

A motion made by Mr. Kellogg with a second made by Dr. Winters to accept the FY 2019

Actuarial Report as presented carried by a unanimous voice vote. Trustees responding were Mr.

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A break was taken from 10:30 a.m. to 10:52 a.m.

ITEM 6 – DISCUSSION AND POSSIBLE ACTION TO ISSUE AN RFP FOR AN

EXTERNAL AUDITOR: TRS Executive Director Tom Spencer explained that this RFP is for

a 5-year contract with the first year subject to renewal for the following 4 years. The State

Auditor and Inspector has the obligation to audit all state agencies, but that doesn’t always

happen. This RFP is a joint proposal by TRS and the SAI. The draft uses the SAI’s language and

is not typical of TRS’ RFP but it contains TRS’ requirements.

A motion made by Dr. Winters with a second made by Mr. Meyer to issue the External Auditor

RFP as presented carried by a unanimous voice vote. Trustees responding were Mr. Boles,

Chairman Florence, Mr. Gaddis, Ms. Harris, Mr. Kellogg, Ms. Manek, Mr. Meyer, Mr. Rector,

and Dr. Winters.

ITEM 7 – DISCUSSION AND POSSIBLE ACTION ON ELIGIBILITY OF AND

NOTIFICATION TO A QUALIFYING STATEWIDE ORGANIZATION

REPRESENTING RETIRED EDUCATORS REGARDING APPOINTMENT OF NON-

VOTING TRUSTEE PURSUANT TO 70 O.S. SECTION 17-106(2)(n) AND OAC 715:1-1-

19: TRS General Counsel Sarah Green reminded Trustees that the Board consists of one non-

voting Trustee who is a member of a retirement education association in Oklahoma. Currently

OREA and RPOE alternate calendar years. Typically, the Board votes in October to approve the

alternate organization, RPOE in this case, for the coming calendar year. Ms. Green referred to

the State Statute that provides for the member to sit on this Board, and the TRS rule that states,

“… the entity must have at least two hundred (200) retired educators in its members who are also

members of TRS.” Each year the upcoming organization certifies that they have at least 200

retired members in their membership who are also members of TRS. This year, Mr. Green could

not verify that there are 200 TRS members in RPOE. She recommended, and the Board agreed,

to vote on this in December to give RPOE more time to verify their TRS memberships. If they

cannot do so, a member of OREA will be selected. There was some discussion. No action was

taken.

ITEM 8 – DISCUSSION AND POSSIBLE ACTION ON RECOMMENDATION TO

ADOPT DRAFTS OF PROPOSED PERMANENT ADMINISTRATIVE RULES FOR

THE PURPOSE OF SUBMISSION TO THE GOVERNOR AND FOR PUBLIC

COMMENT: 715:1-1-5[AMENDED]; 715:10-1-6[AMENDED]; 715:10-5-7[AMENDED];

715:10-9-3[AMENDED]; ; 715:10-13-15[AMENDED]; 715:10-15-3[AMENDED]; 715-10-

17-5[AMENDED]; 715:10-17-16[AMENDED]: Ms. Green explained that TRS’ Permanent

Rulemaking process started early because she will be out for some time in March. She said most

of the proposed permanent rules were emergency rules with the exception of one new rule. She

reviewed the Rule Impact Statements for each rule and explained the next steps of the Permanent

Rulemaking process.

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A motion made by Mr. Meyer with a second made by Mr. Rector to adopt drafts of the proposed

Permanent Administrative Rules as presented carried by a unanimous voice vote. Trustees

responding were Mr. Boles, Chairman Florence, Mr. Gaddis, Ms. Harris, Mr. Kellogg, Ms.

Manek, Mr. Meyer, Mr. Rector, and Dr. Winters.

ITEM 9 – DISCUSSION AND POSSIBLE ACTION TO AUTHORIZE EXECUTIVE

DIRECTOR AND GENERAL COUNSEL TO NEGOTIATE REDUCTION IN LEASE

SPACE FROM WHITE STAR PETROLEUM IN HARVEY PARKWAY BUILDING TO

FREE UP SPACE FOR POTENTIAL NEW TENANTS AND NEW TRS

HEADQUARTERS: Ms. Green described the authority posted in the Board Policy Manual

related to tenant leases. She reviewed the status of White Star Petroleum’s bankruptcy, their

successor, and other tenants. Amending White Star’s lease would free up space on various floors

in the Harvey Parkway building.

A motion made by Mr. Kellogg with a second made by Mr. Boles to authorize TRS’ Executive

Director and General Counsel to negotiate reduction in lease space from White Star Petroleum in

the Harvey Parkway Building carried by a unanimous voice vote. Trustees responding were Mr.



ITEM 10 – DISCUSSION AND POSSIBLE ACTION ON AGENCY REPORTS:

1. TRS Client Services Director Dixie Moody reviewed her division’s metrics through

September 2019: There were 400 new retirement estimate requests, which is normal

for this time of year. She added that her staff is carrying an inventory due to the

retirement projections being done for seminar participants. Of the over 6,500

incoming calls, 87% were answered by an Information Center agent within 14

seconds, 12% opted to go through the menu option; 88 callers abandoned their call

after waiting 8 seconds; the Information center received and responded to 321

incoming emails; and 574 new members accessed the Member Portal. Of 121

members who applied for an October retirement. Of the 3 disability retirements, one

of was approved by the Social Security Administration and the other two by TRS’

Medical Board. There were 138 annuities terminate due to death.

2. Mr. Spencer presented the report of TRS Human Resources Director Kim Bold as she

could not attend today’s meeting. Mr. Spencer said there were two new hires in

September 2019.

3. Finance

a. TRS Deputy Director of Operations John Santos presented Employer Reporting

Manager Debra Plog’s report which was updated Monday. There are no missing

reports from July and two missing reports totaling $63,430.59 from August.

b. Mr. Santos presented TRS CFO Sam Moore’s report as he could not attend

today’s meeting. The Balance Sheet shows total assets increased $242.6M in

September 2019. On the Statement of Revenues, Expenditures and Changes for

the 3 Months Ended September 30, 2019, there was an increase in member and

employer contributions due to teacher pay raises. On the Schedule 1 report, the

Investment Consultant expense reflects one month’s payment in FY 2019 and two

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months’ payments in FY 2020. On the Schedule II report, the Investment

Manager Alternative Expense was under 80% due to budgeting $500K for Meketa

but the FY 2020 contract is only $275K. The Claims for Authorized Expenditures

were presented without comment.

4. Deputy Director of Operations John Santos reviewed issues he has been working on

the past month:

• The new vendor for death audit services resulted in better monitoring and only

two retiree accounts requiring claims of funds for 2 months or less.

• TRS implemented an online security awareness training program for staff to

complete annually.

• Regarding Cybersecurity: Some progress is being made by My Consulting

regarding audit recommendations. OMES provided some of the information

requested. Details are reserved for future executive sessions.

• Almost 4K members accessed the Member Portal over 12K times, and viewed

75K pages. This is a decrease from 91K pages viewed in August.

• TRS went live with Office 365 for email October 1. There were few issues.

Still waiting to meet with OMES about starting server upgrades.

5. TRS General Counsel Ms. Green updated the Board on projects she has been working

on:

• Securities litigation with GE is still in a briefing cycle. More information will

be given at the December meeting.

• Regarding the White Star Bankruptcy: Instead of BCE-Mach purchasing

White Star as reported in September, Contango offered more and was the

winning bidder. Contango reached out to TRS to lease space on the 3rd floor.

There was some discussion about White Star’s obligation to TRS.

• Regarding the Harvey Parkway Building: A party is interested leasing about

7,500 sq. ft. of space on 2nd floor. White Star wants to retain space on the 6th

floor to wind down business.

• Regarding Golden Driller: Working to restructure the partnership agreement

and the fee schedule for the agreement with L&B. Will talk with Meketa

about a plan of action and meet with L&B October 29 to work out terms.

Proposed amendments to that agreement will be brought to the Board in

December.

6. TRS Executive Director Tom Spencer reported some of his activities from September

17 through October 22, 2019:

• Audit: a. Internal Audit: Working with Mr. Santos, OMES and My Consulting

on the cyber security audit. b. External Audit: Worked to prepare for the

audited financial statements presented earlier today.

• Mr. Spencer worked with the hotel to arrange this three-day Board retreat. He

also worked with staff on their presentations.

• Investments (Office Building): Ms. Green covered those details in her report.

• VOYA/403(b) wind down: Worked with Ice Miller to tweak YOVA’s legal

documents. In response to an email that went out, schools districts’ replies are

still trickling in.

• Personnel: During Ms. Bold’s absence several staff are involved to work on

payroll and leave issues.

Page 11 of 107

6

• Actuarial: Read and edited the rough draft of the actuarial valuation reported

presented today.

• Budget Review: Worked with Mr. Moore to prepare answers to questions

presented to several “non-appropriated” agencies by the governor’s budget

advisor.

• Legislation: Mr. Spencer and other retirement system directors will meet with

Rep. Avery Frix November 15 about the interim study on COLAs.

Mr. Spencer asked Mr. Stebbins to update the Board on Harvey Parkway’s financials and

performance. Mr. Stebbins reviewed the report from Meketa, TRS’ new back office

manager. He said the IRR was just over 6%. Mr. Spencer reviewed the balance sheet and

pointed out that earnings for June 2019 were $911,327. He is hoping TRS can move into

the building before July 1, 2020.

ITEM 11 – QUESTIONS AND COMMENTS FROM TRUSTEES: Chairman Florence said

he appreciates TRS staff for the hours they put in on this Board retreat. He also thanked the

Trustees who sacrifice their time and day jobs to attend this retreat. Dr. Winters said he thought

this retreat was well run and he still learns things after being on the Board a long time.

ITEM 12 – NEW BUSINESS: There was no new business.

ITEM 13 – ADJOURNMENT:

A motion made by Dr. Winters with a second made by Mr. Gaddis to adjourn the meeting at

11:47 a.m. carried by a unanimous voice vote. Trustees responding were Mr. Boles, Chairman

Florence, Mr. Gaddis, Ms. Harris, Ms. Manek, Mr. Meyer, Mr. Rector, and Dr. Winters.

By:

_________________________________________


ATTEST:

By:

__________________________________________

Judie Harris

Page 12 of 107

REBA

LANC

E PL

AN

Cash

363,288,200.44

2.1%

0.0%

‐

363,288,200

Fixed Income

3,830,663,309

22.1%

22.0%

3,818,821,679

11,841,630

HOISINGT

ON IN

VESTMEN

T650,905,214

3.7%

4.1%

716,029,065

(65,123,850)

LOOMIS SAY

LES CO

RE PLU

S1,054,675,279

6.1%

6.0%

1,034,264,205

20,411,075

LORD

ABB

ETT CO

RE PLU

S1,060,153,639

6.1%

6.0%

1,034,264,205

25,889,435

MAC

KAY SH

IELD

S CO

RE PLU

S1,064,929,176

6.1%

6.0%

1,034,264,205

30,664,971

Public Equ

ity10,361,377,635

59.7%

62.5%

10,848,925,225

(487,547,590)

Domestic Eq

uity

7,476,146,408

43.1%

43.5%

7,550,851,957

(74,705,549)

Large Cap

3,943,010,339

22.7%

23.3%

4,042,309,539

(99,299,200)

SAWGR

ASS LG

CAP

219,584

0.0%

0.0%

‐

219,584

HOTC

HKIS & W

ILEY

LG CA

P1,678,744

0.0%

0.0%

‐

1,678,744

NT RU

SSELL 1000

1,582,933,790

9.1%

9.3%

1,614,320,073

(31,386,284)

SCI B

ETA US HFE M

BMS

2,358,178,222

13.6%

14.0%

2,430,159,250

(71,981,029)

% of

fund

Compo

sites &

Accou

nts

Market Va

lue

Target %

Target ($

)Over (Und

er)

as of D

ecem

ber 05, 2019

Curren

t Portfolio vs Po

licy Targets

Cash

163,288,200.44

0.9%

0.0%

‐

163,288,200

Fixed Income

3,910,663,309

22.5%

22.0%

3,818,821,679

91,841,630

HOISINGT

ON IN

VESTMEN

T730,905,214

4.2%

4.1%

716,029,065

14,876,150

LOOMIS SAY

LES CO

RE PLU

S1,054,675,279

6.1%

6.0%

1,034,264,205

20,411,075

LORD

ABB

ETT CO

RE PLU

S1,060,153,639

6.1%

6.0%

1,034,264,205

25,889,435

MAC

KAY SH

IELD

S CO

RE PLU

S1,064,929,176

6.1%

6.0%

1,034,264,205

30,664,971

Public Equ

ity10,481,377,635

60.4%

62.5%

10,848,925,225

(367,547,590)

Domestic Eq

uity

7,596,146,408

43.8%

43.5%

7,550,851,957

45,294,451

Large Cap

4,063,010,339

23.4%

23.3%

4,042,309,539

20,700,800

SAWGR

ASS LG

CAP

219,584

0.0%

0.0%

‐

219,584

HOTC

HKIS & W

ILEY

LG CA

P1,678,744

0.0%

0.0%

‐

1,678,744

NT RU

SSELL 1000

1,622,933,790

9.3%

9.3%

1,614,320,073

8,613,716

SCI B

ETA US HFE M

BMS

2,438,178,222

14.0%

14.0%

2,430,159,250

8,018,971

% of

fund

Compo

sites &

Accou

nts

Market Va

lue

Target %

Target ($

)Over (Und

er)

as of D

ecem

ber 05, 2019

Prop

osed

Portfolio vs Po

licy Targets

Cash

$363,288,200

Capital Calls

Dune

IV‐$6,248,528

Pimco COF

‐$5,000,000

ME Be

nefits

‐$98,000,000

Rebalance Plan

to SciBe

ta‐$80,000,000

to Hoisington

‐$80,000,000

to Ru 1000

‐$40,000,000

Jan. 1, 2020 Est C

ash

$54,039,672

Page

13

of 1

07

TOM SPENCER J. KEVIN STITT EXECUTIVE DIRECTOR GOVERNOR

STATE OF OKLAHOMA TEACHERS’ RETIREMENT SYSTEM OF OKLAHOMA

TRS Request for Proposal # 715‐19‐1004

REQUEST FOR PROPOSAL

RFP #: 715‐19‐1004 RFP Date: __December 12th, 2019__

Type of Services Requested: Global Custody Services

TRS reserves the right to reject any or all proposals submitted. There is no express or implied obligation for TRS to reimburse Vendors for any expenses incurred in preparing proposals in response to this RFP. Proposals submitted in response to the RFP become the property of TRS and are subject to public inspection. TRS reserves the right to modify the RFP contents and requirements at any time prior to the submission deadline. If it becomes necessary to revise the RFP at any time prior to the proposal deadline, TRS will post revisions to the TRS website at www.ok.gov/TRS/. This RFP is comprised of 18 total pages, as follows:

This RFP can be found on the TRS website at www.ok.gov/trs. If you are unable to download this document from

the website, you can also obtain an electronic copy of this RFP through e‐mail. Send your request to

[email protected]. Include the name of the RFP and the proposal number in your request. All responses

to this RFP must be submitted in accordance with the instructions contained in the RFP.

Brief Description of Services Requested: The Board of Trustees of the Teachers’ Retirement System of Oklahoma (TRS) is seeking proposals from qualified firms to provide global custody services. These services will include, but are not limited to, master custody services, securities lending, commission recapture, and transition management. This RFP provides information on the System and establishes the specifications and requirements for submitting a proposal. The contract will cover a twelve (12) month period with a start date of July 1, 2020, subject to annual renewal for six (6) additional terms.

SECTION PAGE # Proposal Cover Sheet 2

Bidder’s Certification 3 A. General Provisions 4 B. TRS Background Information 8 C. Prohibited Communications with TRS 9 D. Specifications, Qualifications, and Timeline 9 E. Evaluation Criteria 11 F. Questionnaire 11 G. Checklist 17 Appendix A: Oklahoma Teachers’ Asset Allocation 18

Page 14 of 107

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PROPOSAL COVER SHEET

RFP #: ___715‐19‐1004___________

RESPONSE DUE DATE: _____January 31st, 2020_________ TIME: _4:00 PM_CST/CDT

RETURN SEALED BID TO:

TEACHERS’ RETIREMENT SYSTEM OF OKLAHOMA RFP #_____715‐19‐1004________

ATTN: JESSICA MALLOY 2500 N. LINCOLN BOULEVARD, 5TH FLOOR

OKLAHOMA CTY, OK 73105

BIDDER IDENTIFICATION:

Name of Firm:

________________________________________________________________

FEI/SSN:

Address:

________________________________________________________________

________________________________________________________________

City/State/Zip Code:

Email:

________________________________________________________________

________________________________________________________________

Telephone Number: ________________________________________________________________

Firm Website: _____________________________________________________________

________________________________________________ ____________________________________________ Authorized Signature Date ________________________________________________ ____________________________________________ Printed Name Title

Page 15 of 107

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BIDDER’S CERTIFICATION (Non‐Collusion Certification)

Agency Name: Teachers’ Retirement System of Oklahoma Agency Number: 715

RFP #: __715‐19‐1004______

A. I certify that: 1. I am the duly authorized agent of __________________________________, the Bidder submitting this proposal which is attached to this statement for the purpose of certifying the facts pertaining to the existence of collusion among vendors and between bidders and state officials or employees, as well as facts pertaining to the giving or offering of things of value to government personnel in return for special consideration in the letting of any contract pursuant to the proposal to which this statement is attached; 2. I am fully aware of the facts and circumstances surrounding the making and submitting of this proposal and has

been personally and directly involved in the proceedings leading to the submission of such proposals; and

3. Neither the Bidder nor anyone subject to the Bidder’s direction or control has been a party:

a) to any collusion among Bidders in restraint of freedom of competition by agreement to propose a fixed price or to refrain from submitting a proposal; b) to any collusion with any state official or employee as to quantity, quality or price in the prospective contract, or as to any other term of such prospective contract; c) in any discussions between Bidders and any state official concerning exchange of money or any other thing of value for special consideration in the award of this prospective contract; nor d) to any collusion with any state agency or political subdivision official or employee as to create a sole‐source acquisition in contradiction to Section 85.45j of Title 74 of the Oklahoma Statutes. B. I certify, if awarded the contract, whether competitively bid or not, neither the Bidder nor anyone subject to the Bidder’s

direction or control has paid, given, donated or agreed to pay, give or donate to any officer or employee of the State of

Oklahoma, any money or other thing of value, either directly or indirectly, in procuring this prospective contract.

The Bidder’s Certification must be made out in the name of the bidder and must be properly executed by an authorized person, with full knowledge and acceptance of all its provisions.

Supplier Authorized Signature Certified This Date

Printed Name Title

Phone Number Email

Page 16 of 107

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A. GENERAL PROVISIONS

A.1. Definitions

As used herein, the following terms shall have the following meaning unless the context clearly indicates otherwise:

A.1.1. "Acquisition” means items, products, materials, supplies, services, and equipment an entity acquires by purchase, lease purchase, lease with option to purchase, or rental;

A.1.2. “Addendum” means a written restatement of or modification to a Contract Document executed by the Supplier and State.

A.1.3. ”Bid” means an offer in the form of a bid, proposal, or quote a bidder submits in response to a solicitation;

A.1.4. "Bidder" means an individual or business entity that submits a bid in response to a solicitation;

A.1.5. "Solicitation" means a request or invitation by the Teachers’ Retirement System (TRS) for a supplier to submit a priced offer to sell acquisitions to the state. A solicitation may be an invitation to bid, request for proposal, or a request for quotation; and

A.1.6. ”Supplier” or “vendor” means an individual or business entity that sells or desires to sell acquisitions to state agencies.

A.2. Solicitation Questions and Answers

A.2.1. In an effort to clarify any issues in this solicitation, TRS will respond only to questions that are presented through email. Questions should be submitted to Jessica Malloy at [email protected] by the deadline outlined in this solicitation. All questions and answers will be consolidated into a single Q&A document. The Q&A document will be posted on the TRS website by the deadline outlined in this solicitation. This will be the only distribution method for the Q&A document.

A.3. Bid Submission

A.3.1. Submitted bids shall be in strict conformity with the instructions to bidders and shall be submitted with a completed Responding Bidder Information, Bidder’s Certification, and any other forms required by the solicitation.

A.3.2. Bids shall be submitted to TRS in a single envelope, package, or container and shall be sealed, unless otherwise detailed in the solicitation. The name and address of the bidder shall be inserted in the upper left corner of the single envelope, package, or container. THE SOLICITATION NUMBER MUST ALSO APPEAR ON THE FACE OF THE SINGLE ENVELOPE, PACKAGE, OR CONTAINER.

A.3.3. All bids shall be legible and completed in ink or with electronic printer or other similar office equipment. The Bidder shall submit one (1) original hard copy proposal and one (1) electronic version of the complete response on a USB drive in PDF or similar format. The container for the USB drive must be clearly marked with the Bidder’s name and RFP number. Bids will NOT be accepted via email.

A.3.4. All bids submitted shall be subject to the Oklahoma Central Purchasing Act, Central Purchasing Rules, and other statutory regulations as applicable, these General Provisions, any Special Provisions, solicitation specifications, required certification statement, and all other terms and conditions listed or attached herein—all of which are made part of this solicitation.

A.4. Bid Change

A.4.1. If the bidder needs to change a bid prior to the solicitation response due date, a new bid shall be submitted to the procuring agency with the following statement "This bid supersedes the bid

Page 17 of 107

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previously submitted" in a single envelope, package, or container and shall be sealed and delivered pursuant to A.3.2 above.

A.5. Certification Regarding Debarment, Suspension, and Other Responsibility Matters

By submitting a response to this solicitation:

A.5.1. The prospective primary participant and any subcontractor certifies to the best of their knowledge and belief, that they and their principals or participants:

A.5.1.1. Are not presently debarred, suspended, proposed for debarment, declared ineligible, orvoluntarily excluded by any Federal, State or local department or agency;

A.5.1.2. Have not within a three‐year period preceding this proposal been convicted of or pled guiltyor had a civil judgment rendered against them for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, State or local) contract; or for violation of Federal or State antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property;

A.5.1.3. Are not presently indicted for or otherwise criminally or civilly charged by a governmentalentity (Federal, State, or local) with commission of any of the offenses enumerated in paragraph A.5.1.2. of this certification; and

A.5.1.4. Have not within a three‐year period preceding this application/proposal had one or morepublic (Federal, State, or local) contracts terminated for cause or default.

A.5.2. Where the prospective primary participant is unable to certify to any of the statements in this certification, such prospective participant shall attach an explanation to its solicitation response.

A.6. Bid Opening

A.6.1. Sealed bids shall be opened by the Business Manager with one witness present at the offices of the Teachers’ Retirement System, 2500 N. Lincoln Boulevard, 5th Floor, Oklahoma City, OK, 73105, as reasonably practical after the time and date specified in the solicitation as the Response Due Date and Time.

A.7. Open Bid / Open RecordA.7.1. Pursuant to the Oklahoma Public Open Records Act, a public bid opening does not make the bid(s)

immediately accessible to the public. The procurement or contracting agency shall keep the bid(s) confidential, and provide prompt and reasonable access to the records only after a contract is awarded or the solicitation is cancelled. This practice protects the integrity of the competitive bid process and prevents excessive disruption to the procurement process. The interest of achieving the best value for the State of Oklahoma outweighs the interest of vendors immediately knowing the contents of competitor’s bids. [51 O.S. § 24A.5(6)]

A.8. Late Bids

A.8.1. Bids received by the procuring agency after the response due date and time shall be deemed non‐responsive and shall NOT be considered for any resultant award.

A.9. Legal Contract

A.9.1. Submitted bids are rendered as a legal offer and any bid, when accepted by the procuring agency, shall constitute a contract.

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A.9.2. The Contract resulting from this solicitation may consist of the following documents in the following order of precedence: The Contract, any Addendum to the Contract; Purchase Order, as amended by Change Order (if applicable); Solicitation, as amended (if applicable); and Successful bid (including required certifications), to the extent the bid does not conflict with the requirements of the solicitation or applicable law.

A.10. Pricing

A.10.1. Bids shall remain firm for a minimum of one‐hundred twenty (120) days from the solicitation closing date.

A.10.2. In accordance with 74 O.S. §85.40, ALL travel expenses to be incurred by the supplier in performance of the Contract shall be included in the total bid price/contract amount.

A.10.3. State agencies are exempt from sales taxes and federal excise taxes. Purchases made by suppliers on behalf of a state agency are not exempt from sales or federal taxes unless otherwise provided by law and those taxes may not be passed along to the state agency as part of the bid.

A.11. Negotiations

A.11.1. In accordance with Title 74 §85.5, TRS reserves the right to negotiate with one, selected, all or none of the vendors responding to this solicitation to obtain the best value for the agency. Negotiations could entail discussions on products, services, pricing, contract terminology or any other issue that may mitigate the State’s risks. Firms that contend that they lack flexibility because of their corporate policy on a particular negotiation item shall face a significant disadvantage and may not be considered. If such negotiations are conducted, the following conditions shall apply:

A.11.2. Terms, conditions, prices, methodology, or other features of the bidders offer may be subject to negotiations and subsequent revision. As part of the negotiations, the bidder may be required to submit supporting financial, pricing, and other data in order to allow a detailed evaluation of the feasibility, reasonableness, and acceptability of the offer.

A.11.3. The requirements of the Request for Proposal shall not be negotiable and shall remain unchanged unless TRS determines that a change in such requirements is in the best interest of the State Of Oklahoma.

A.12. Rejection of Bid

A.12.1. TRS reserves the right to reject any bids that do not comply with the requirements and specifications of the solicitation. A bid may be rejected when the bidder imposes terms or conditions that would modify requirements of the solicitation or limit the bidder's liability to the State. Other possible reasons for rejection of bids are listed in OAC 260:115‐7‐32.

A.13. Award of Contract

A.13.1. TRS may award the Contract to more than one bidder by awarding the Contract(s) by item or groups of items, or may award the Contract on an ALL OR NONE basis, whichever is deemed by TRS to be in the best interest of the State of Oklahoma.

A.13.2. Contract awards will be made to the lowest and best bidder(s) unless the solicitation specifies that best value criteria is being used.

A.13.3. In order to receive an award or payments from TRS, suppliers must be registered. The vendor registration process can be completed electronically through the OMES website at the following link: https://www.ok.gov/dcs/vendors/index.php .

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A.13.4. The initial contract term will be the Date of Award through the end of the current fiscal year and maybe subject to annual renewal.

A.14. Contract Modification

A.14.1. The Contract may be modified only through a written Addendum, signed by the Executive Director or Board Chair of TRS (whichever is applicable) and the supplier.

A.15. Delivery, Inspection and Acceptance

A.15.1. Supplier(s) awarded the Contract shall be required to deliver products and services as bid on or before the required date. Deviations, substitutions or changes in products and services shall not be made unless expressly authorized in writing by the procuring agency.

A.16. Invoicing and Payment

A.16.1. Upon submission of an accurate and proper invoice, the invoice shall be paid in arrears after products have been delivered or services provided and in accordance with applicable law. Invoices shall contain the purchase order number, a description of the products delivered or services provided, and the dates of such delivery or provision of services. An invoice is considered proper if sent to the proper recipient and goods or services have been received.

A.16.2. Pursuant to 74 O.S. §85.44(B), invoices will be paid in arrears after products have been delivered or services provided. Payment terms will be net 45. Interest on late payments made by the State of Oklahoma is governed by 62 O.S. § 34.72.

A.16.3. Additional terms which provide discounts for earlier payment may be evaluated when making an award. Any such additional terms shall be no less than ten (10) days increasing in five (5) day increments up to thirty (30) days. The date from which the discount time is calculated shall be the date of a proper invoice.

A.16.4. State agency acquisitions are exempt from sales taxes and federal excise taxes. Bidders shall not include these taxes in price quotes.

A.17. Audit and Records Clause

A.17.1. As used in this clause, “records" includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form. In accepting any Contract with the State, the successful bidder(s) agree any pertinent State or Federal agency will have the right to examine and audit all records relevant to execution and performance of the resultant Contract.

A.17.2. The successful supplier(s) awarded the Contract(s) is required to retain records relative to the Contract for the duration of the Contract and for a period of seven (7) years following completion and/or termination of the Contract. If an audit, litigation, or other action involving such records is started before the end of the seven (7) year period, the records are required to be maintained for two (2) years from the date that all issues arising out of the action are resolved, or until the end of the seven (7) year retention period, whichever is later.

A.18. Choice of Law / Choice of Venue

A.18.1. Any claims, disputes, or litigation relating to the solicitation, or the execution, interpretation,performance, or enforcement of the Contract shall be governed by the laws of the State of Oklahoma. Venue for any action, claim, dispute or litigation relating in any way to the Contract shall be in Oklahoma County, Oklahoma.

A.19. Termination for Cause

Page 20 of 107

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A.19.1. The supplier may terminate the Contract for default or other just cause with a 30‐day written request and upon written approval from the procuring agency. TRS may terminate the Contract for default or any other just cause upon a 30‐day written notification to the supplier.

A.19.2. TRS may terminate the Contract immediately, without a 30‐day written notice to the supplier, when violations are found to be an impediment to the function of the agency and detrimental to its cause, when conditions preclude the 30‐day notice, or when TRS determines that an administrative error occurred prior to Contract performance.

A.19.3. If the Contract is terminated, TRS shall be liable only for payment for products and/or services delivered and accepted.

A.20. Termination for Convenience

A.20.1. TRS may terminate the Contract, in whole or in part, for convenience if it determines that termination is in the State's best interest. TRS shall terminate the contract by delivering to the supplier a Notice of Termination for Convenience specifying the terms and effective date of Contract termination. The Contract termination date shall be a minimum of 60 days from the date the Notice of Termination for Convenience is issued by TRS.

A.20.2. If the Contract is terminated, TRS shall be liable only for products and/or services delivered and accepted, and for costs and expenses (exclusive of profit) reasonably incurred prior to the date upon which the Notice of Termination for Convenience was received by the supplier.

A.21. Insurance

A.21.1. The successful supplier(s) awarded the Contract shall obtain and retain insurance, including workers' compensation, automobile insurance, medical malpractice, and general liability, as applicable, or as required by State or Federal law, prior to commencement of any work in connection with the Contract. The supplier awarded the Contract shall timely renew the policies to be carried pursuant to this section throughout the term of the Contract and shall provide the procuring agency with evidence of such insurance and renewals.

A.22. Employment Relationship

A.22.1. The Contract does not create an employment relationship. Individuals performing services required by this Contract are not employees of the State of Oklahoma or TRS. The supplier's employees shall not be considered employees of the State of Oklahoma nor TRS for any purpose, and accordingly shall not be eligible for rights or benefits accruing to state employees.

A.23. Compliance with Applicable Laws

A.23.1. The products and services supplied under the Contract shall comply with all applicable Federal, State, and local laws, and the supplier shall maintain all applicable licenses and permit requirements.

B. TRS BACKGROUND INFORMATION

B.1. Legal Authorization.

B.1.1. The Teachers’ Retirement System of Oklahoma (TRS) was created by an act of the Oklahoma Legislature in 1943 after citizens amended the state constitution allowing the creation of a public retirement program for educators. TRS is established as set forth in 70 O.S. § 17‐101 et seq. and placed under the management of the Board of Trustees for the purpose of providing retirement allowances and other benefits for teachers of the State of Oklahoma. The Board of Trustees of the Teachers’ Retirement System of Oklahoma (TRS) is charged with the investment of approximately $16.0 billion in retirement funds for education employees. The Board of Trustees and TRS staff oversee the administration of the

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System to ensure adequate funds are maintained to meet the financial obligations of the entire membership. In directing investments of TRS funds, the Board seeks to maximize gains, minimize losses, and protect the fund. TRS has a budgeted staff of 40 employees. The Executive Director is the chief administrative officer of the agency.

B.2. Board Composition. B.2.1. TRS is administered by a Board of Trustees composed of 15 members including the State Superintendent

of Public Instruction or designee, the Director of the State Office of Career and Technology Education or designee, the Director of the Office of Management and Enterprise Services (OMES) or designee, the State Treasurer or designee, and members appointed by the Governor, the Speaker of the House of Representatives, the President Pro Tempore of the State Senate, and one non‐voting member appointed by a retired educators association.

C. COMMUNICATION WITH TRS

C.1. Communications Prohibited. C.1.1. To clarify any issues in this RFP, TRS will respond only to questions that are presented as described in

paragraph A.2 above. Telephone questions will not be accepted. TRS policy prohibits direct contact between prospective service providers and TRS Board members, consultants, or staff during this RFP process. This does not include communication with TRS’ incumbent service provider for normal business not related to this selection process. From the date of release of this RFP until a Vendor is selected and a contract is executed and approved, all contacts and communications regarding this RFP are restricted to the Q&A provisions in paragraph D of Section A.2. Exceptions include communications with TRS staff identified in this section and designated participants in attendance only during negotiations, presentations, and contract award and execution. Violation of these conditions may result in rejection of a Vendor’s proposal.

D. SOLICITATION SPECIFICATIONS, MINIMUM QUALIFICATIONS, AND TIMELINE

D.1. Services Requested. D.1.1. The Teachers’ Retirement System, on behalf of the Board of Trustees, is issuing this request for

proposals to identify a qualified firm to provide global custody and related services. These services will include safekeeping, accounting, delivery, settlement, securities valuation, wire transfers, investment performance reporting, securities lending, transition management, tax reclamation, securities litigation claims processing, STIF accounts, FX execution, and commission recapture.

D.2. Minimum Qualifications. D.2.1. The Vendor shall answer, to the best of its abilities, all questions to Section VII, Questionnaire.

D.2.2. The Vendor is prohibited from subcontracting any of the required services unless such subcontracts

are specifically set forth in the Vendor’s response. This prohibition shall not apply to the international (Non‐US) sub‐custodian network.

D.2.3. Vendors should have substantial experience in the global custody of assets. Each Vendor must clearly state that it meets the requirements described in this Section. The minimum criteria are stated in the table below. Please do not submit an application unless you are able to answer “Yes” to all of the minimum criteria.

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Yes / No

Is the Vendor a U.S. domiciled trust company and a member of the Federal Reserve?

Is the Vendor eligible to do business in the State of Oklahoma?

Does the Vendor have at least $1 trillion (US dollars) in total assets under custody as of

September 30th, 2019?

Does the Vendor have a total number of at least 200 institutional clients?

Does the Vendor have a total number of at least 30 institutional clients with $2 billion

in tax‐exempt assets or greater?

Has the Vendor been providing custody services for a minimum of fifteen (15) years?

No key members of the service team nor the selected Vendor may have, or could

potentially have, a material conflict of interest, in fact or in appearance, with the

System.

D.3. Solicitation Deadline and Timeline. D.3.1. The deadline for receipt of completed proposals is 4:00 p.m. Central Time, on January 31st, 2020.

Proposals submitted to an incorrect address, location, or received after this date or time will be rejected and will not be considered. TRS will not grant requests for extension of the submission date or time. A complete timeline for this solicitation is as follows:

Event Date & Time

Issuance of Solicitation (RFP) December 12th, 2019 ‐4:00pm CST

Questions Due to TRS January 10th, 2020 – 4:00pm CST

Q&A Posted to TRS website January 17th 2020 – 4:00pm CST

Response to Solicitation (RFP) Due January 31st, 2020 – 4:00pm CST

Contract Start Date July 1st, 2020

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E. EVALUATION CRITERIA

E.1. Best Value Criteria.This RFP will be evaluated as best value in accordance with Title 74 Oklahoma Statutes, §85.7. The best valuecriteria for this proposal is as follows:

E.1.1. Bidder’s ability to perform Services Requested, E.1.2. Bidder’s experience and record of successful past performance with acquisitions of similar scope

and complexity, E.1.3. Bidder’s use of proven development methodology, and innovative use of current technologies

that lead to quality results, E.1.4. Bidder’s response to Minimum Qualifications, E.1.5. Price and Cost, E.1.6. Interview of Bidder, if requested.

F. QUESTIONNAIRE

F.1. Organization – CorporateF.1.1. Provide a brief history of the firm. F.1.2. Provide details of the financial condition of the firm. A copy of the most recent audited annual report

will fulfill this requirement. F.1.3. List your firm’s lines of business and approximate contributions of each business to your organization’s

total revenue and profit. If your firm is an affiliate or subsidiary of an organization, list the lines of business of the parent firm and identify the percentage of the parent firm’s total revenue that your subsidiary or affiliate generates.

F.1.4. Briefly describe your master custody service capabilities including those items that distinguish you from your competition. Describe your firm’s commitment to master custody relationships from an organizational resource perspective.

F.2. Risk Management & Internal ControlsF.2.1. Identify and describe the major risk factors that you manage in a custody relationship. Describe how

you manage these risks, including measures and controls in relation to wire transfers and cash movement.

F.2.2. Describe how you manage the sub‐custodians, technology, counter‐party and regulatory risk. F.2.3. Summarize any errors or weaknesses that were discovered as part of your most recent Statement on

Standards for Attestation Engagements (SSAE) No. 16 – Reporting on Controls at a Service Organization report. What steps have been taken to correct the errors or otherwise strengthen the internal controls of your system?

F.2.4. Describe the various types of insurance coverage and indemnifications provided to protect custody clients relating to the services in this RFP.

F.2.5. Briefly describe your practice of updating documented policies and procedures.

F.3. CapabilitiesF.3.1. Describe your procedures for tax reclaims. Identify any country for which you do not provide tax reclaim

services. F.3.2. Identify any country for which you do not offer country opening document services. F.3.3. Do you provide directed brokerage services to your custody clients? If so, please describe. F.3.4. Do you provide monitoring on securities litigation proceedings? Describe your standard service

including the claims management process and reporting requirements.

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F.3.5. Do you provide additional services relating to securities litigation, and if so, what additional fees are associated with this service?

F.3.6. Describe the services provided with respect to class action processing. Do you file both domestic and international claim documentation to recover from settlement proceeds? Do you file class actions for claims involving time‐periods prior to our contract start date?

F.4. Settlement, Securities Processing and Custody F.4.1. Discuss your policy and procedures for assuring that each client’s assets are properly held in safekeeping

and positions are accurately maintained in your accounting records. Include information on segregation of assets and distinctions between physical and book entry positions.

F.4.2. Discuss your procedures for settling purchases and sales. Start with the trade entry by an investment manager, and include in your discussion actual settlement date processing.

F.4.3. Describe your system for registration and custody of assets, including depository used, level of interface and procedures for depository‐ineligible securities.

F.4.4. Briefly describe your policy and procedures on failed trades for both domestic and foreign securities and the steps that will be taken to minimize trade failures.

F.5. Accounting, Auditing and Reporting F.5.1. Are you able to provide monthly audited accounting reports within seven (7) working days of month

end? If not, when are the audited reports available? Describe your procedures regarding balancing and resolving differences with the investment managers.

F.5.2. Are you able to provide monthly performance reporting on a gross and net of fee basis within ten (10) working days of month end? If not, when are returns available? How do you handle monthly performance data that is provided after the books are closed for the month? Do you modify previously closed month’s data or incorporate into the month the data is received?

F.5.3. Describe the system of controls that assures accuracy of the processing and reporting of the master trust/master custody and securities lending departments.

F.5.4. Identify the internal and external entities that audit, regulate, and/or review your custody and securities lending services. Briefly discuss the frequency and scope of audits performed during the last three years. Were there any deficiencies indicated by your independent auditor? If so, please discuss.

F.5.5. What current accounting, holding, and transaction data is available online and for how long? What historical data is available online or through other electronic media? How long do you store daily and monthly account holdings?

F.5.6. What is the lag time between trade execution, availability of online transaction data to the client and the posting of the transactions to your accounting system?

F.5.7. Please provide a copy of your pricing guidelines for each asset class. Describe your procedures for reconciling prices with investment managers. What procedures are in place to ensure accurate pricing?

F.5.8. List and provide samples of standard accounting reports (audited and un‐audited) provided by your system.

F.5.9. Describe your reporting capabilities in regard to private market investments (private equity, private real estate, private debt funds, etc.)

F.6. Systems and Technology

F.6.1. Provide a brief summary of the systems supporting your global custody services. Describe the staffing and financial commitment to maintaining these resources.

F.6.2. Is a demo site available that the Agency can access? F.6.3. What are the processes relating to scheduled downtime, for example: client notification, parallel

servers, period of time system unavailable per occurrence, etc.? Has there been any unscheduled

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downtime greater than one (1) business day in the last year? What were the primary causes and how were the problems corrected?

F.6.4. Describe your firm’s commitment to enhancing your technology platforms. Are there any platforms or services in development relating to global custody services?

F.6.5. Describe your policies for ownership and retention of client information and data. For what period of time is data retained on an active, client‐accessible basis and what are the procedures for accessing archived data?

F.7. Security and Business Continuity F.7.1. What are your security procedures to protect client information, especially with respect to unauthorized

access to data, methods for authenticating users, and providing different access rights and permissions? Do you conduct periodic risk assessments to identify cybersecurity threats, vulnerabilities and potential business consequences?

F.7.2. Summarize your emergency management/business continuation plan. In your description, please identify alternative operating sites, the maximum time required to resume business operations, and process for file backup and off‐site data storage.

F.7.3. Have you experienced any security breaches since January 2013? If so, explain, providing known information on number of records breached, how the breach was discovered, source of the compromise, duration, and how notice was made to those potentially impacted by the breach.

F.7.4. Confirm that you have regular independent IT security testing performed on your computing environment(s) and your client software applications. Please describe the testing program including the monitoring of access to system information.

F.8. Trade and Foreign Exchange Processing F.8.1. What are your policies for best execution for FX transactions? When are FX transactions executed (i.e.

throughout the day, at open, at close, etc.)? F.8.2. Describe your FX operations and capabilities. Are there any fees and timing requirements associated

with FX transactions? What current transaction information is available online? What historical trade information is available online?

F.8.3. What if any, business risk does the custodial bank assume as part of its exchange services?

F.9. Cash Management F.9.1. Please include a description of all daily valued cash management vehicles for qualified retirement plans

(i.e., sweep vehicle, STIF, etc.). Include investment performance for each vehicle for each of the past three calendar years.

F.9.2. What are your policies and procedures for investing daily surplus cash balances that are not used by investment managers?

F.9.3. Have any of your short‐term investment funds incurred defaults during the past ten (10) years? If so, please explain the circumstances of the default, recovery of investment, allocation of loss, etc. Did any participants incur a loss? Were any adjustments made to your investment guidelines/policies to avoid a similar problem?

F.9.4. What is the daily notification deadline for outgoing wire transfers? What is the daily deadline for receiving incoming wire transfers in order to ensure same‐day investment?

F.10. Performance Measurement and Analytics F.10.1. Discuss and explain how your custody, accounting and performance systems are integrated. Indicate

whether these systems are internal or if you use any outside vendor's systems. If so, please indicate which vendor’s systems you use.

F.10.2. What procedures exist to verify the accuracy of rates of return? Describe your procedure to verify

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returns with investment managers? What percentage of the returns that you calculate is verified with investment managers?

F.10.3. Describe the basic performance measurement and analytics services and reports currently available to institutional custody clients. Can the performance reports can be customized to meet the client’s needs?

F.10.4. Confirm that all benchmarks in Oklahoma Teachers’ IPS are available for use. These can be found at: https://www.ok.gov/TRS/Publications/TRS_Investment_Policy_Statement/

F.10.5. Please discuss your performance measurement capabilities in the private equity and real estate areas. What systems do you use to calculate internal rate of returns for private equity portfolios?

F.10.6. Do you provide universe comparison services based on an internal universe, an outside vendor (such as Wilshire/eVestment), or both? Others?

F.11. Securities Lending F.11.1. Please describe your securities lending program. F.11.2. How do you manage events (i.e. income, sale, corporate actions, recalls by lender) involving securities

that are out on loan? F.11.3. Please list and provide samples of reports related to securities lending activities. F.11.4. Has your securities lending program ever experienced a collateral default? If yes, what actions were

taken to benefit the affected clients? What was the scope of client losses? F.11.5. What types of collateral are you willing to accept? What are the percentage breakdowns of the

collateral types you hold on average? What are the minimum levels of collateral you require by security type?

F.11.6. Provide your current list of approved borrowers. Describe your process for approving the borrowers who participate in your securities lending program both domestic and foreign.

F.11.7. What are the terms of indemnification available to your clients?

F.12. Transition and Conversion – For non‐incumbent respondents only F.12.1. What group will serve as the Transition Team in planning and implementing the Agency custody

account? Identify the individuals and the roles each will serve in the transition. Also, describe their experience and how they are related to the Business Unit.

F.12.2. Describe your transition planning process. Given a July 1, 2020 commencement date, what would be an appropriate timeline for the transition of the System’s assets?

F.12.3. What resources are required of the client during the transition period? F.12.4. What actions, planning and training would be necessary for the System’s staff, outside investment

managers, and current master custodian during a global custodial transition? F.12.5. What are the main risks involved in transitioning assets between global custodians and how do you plan

on mitigating those risks? F.12.6. How would you prepare your accounting and performance measurement databases and systems for

processing the System’s investments? Discuss the following: F.12.7. What information would you load into your system in advance and how could you receive that data? F.12.8. For what period would you conduct parallel processing in order to develop history, test procedures, and

establish entitlements/accruals? F.12.9. Describe your ability to load at least ten (10) years of historic data from a prior custodian and make

available to the Agency in a searchable format. If there are any fees to load and maintain this data, please include in the bundled fee in Appendix A.

F.13. Personnel F.13.1. Provide brief biographies and an organizational chart of key individuals who would be assigned to the

System’s account in the following global custody service areas: global custody relationship

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management, client accounting, security lending, performance measurement and analytics. F.13.2. Describe your approach to staff training and retention.

F.14. References

F.14.1. Provide a current list of three (3) public pension references with assets in custody over $5 billion. Please provide their firm, name, and contact information.

F.15. Disclosures F.15.1. Since January 1, 2014, has any officer or principal been involved in any litigation or other legal

proceedings or any regulatory investigation relating to provision of custody services? If so, provide a description, explanation, and indicate the current status.

F.15.2. Is the Vendor presently party to any mergers with and/or acquisitions of or by other organizations? If yes, provide specifics and include projected timelines.

F.15.3. Does the Vendor sell or report any data from its clients, either specifically or in aggregate, to any organizations? If so, disclose these arrangements and information shares.

F.15.4. Identify any potential conflicts of interest that exist which would prohibit your firm from providing unbiased services as described in this RFP and your proposal.

F.15.5. Provide a brief explanation and indicate the current status of any business litigation or other proceedings related to the custody business or securities lending involving your company or any officer or principal over the past five years.

F.15.6. Relating to the services proposed in this RFP, has your firm, or any of its employees, been censured or otherwise admonished by the SEC, FINRA, or any other regulatory authority domestically or abroad? If yes, describe.

F.16. Fees & Additional Information F.16.1. Please provide a comprehensive, bundled base custody fee per annum for the seven (7) year term of

this contract. F.16.2. Provide a detailed list of services included in the comprehensive, bundled base custody fee. F.16.3. Does the base custody fee require participation in your securities lending program? Does the base

custody fee require any other mandatory participation or requirements? F.16.4. Please detail the securities lending split between the System and your firm. F.16.5. Are any of the below services proposed in this RFP not included in the base custody fee? If so, please

detail those fees.

STIF expense ratio Cash sweep Class action claims processing

Security litigation FX execution Wire transfers

Transition management

Custom reporting

Market opening

Performance & analytics

Overdraft F.16.6. Please list and detail any and all relevant fees not listed in the above question. F.16.7. Please fill out the below table in Excel format and submit digitally.

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Corporate History

Year founded

Years in global custody business

Nature of firm's ownership (C‐Corp, Private, etc.)

Short‐term debt rating

Long‐term debt rating

Total global custody revenue (most recent year)

Global Custody Client Base

Total number of global custody clients

Number of public pension clients

Total value of assets under custody

Value of public pension assets under custody

Total clients gained in the last 3 years (# / $AUC)

Total clients lost in the last 3 years (# / $AUC)

Number of employees within the global custody department

Securities Lending

Years in business

Current number of clients

Number of public pension clients

Number of clients gained in the last 3 years

Number of clients lost in the last 3 years

Average % of all eligible securities on loan (past 3 years)

% of all eligible domestic equities on loan (past 3 years)

% of all eligible international equities on loan (past 3 years)

% of all eligible corporate bonds on loan (past 3 years)

% of all eligible government bonds (US) on loan (past 3 years)

% of all eligible sovereign bonds (Intl.) on loan (past 3 years)

% of all eligible agency bonds on loan (past 3 years)

Securities lending return estimate for Oklahoma Teachers' current

portfolio

Cash Management ‐ Most commonly used vehicle

Total current STIF AUM

2018 annualized return

2019 annualized return (most up‐to‐date)

Personnel

Proposed custody relationship manager

Number of accounts serviced by this relationship mgmt. team

Account relationship staff added (last 3 years)

Account relationship staff lost (last 3 years)

Average years of experience of relationship team

Controls

External auditing firm name

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G. CHECKLIST Proposal Cover Sheet.

Bidder’s Certification (Non‐Collusion Certification).

Detailed Price/Cost Sheet.

Bidder’s Answers to Questionnaire.

Complete Bidder’s Response in requested format(s) listed in A.3.

Proof of insurance, references, other documentation, as requested.

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Appendix A: Oklahoma Teachers’ Retirement System Asset Allocation

Cash 364,942,153.24 2.1% 0.0% ‐ 364,942,153 Cash

Fixed Income 3,846,235,740 22.3% 22.0% 3,802,976,560 43,259,180 Fixed Income

HOISINGTON INVESTMENT 662,591,371 3.8% 4.1% 713,058,105 (50,466,735) Duration

LOOMIS SAYLES CORE PLUS 1,056,621,863 6.1% 6.0% 1,029,972,818 26,649,045 Core Plus

LORD ABBETT CORE PLUS 1,060,945,220 6.1% 6.0% 1,029,972,818 30,972,402 Core Plus

MACKAY SHIELDS CORE PLUS 1,066,077,286 6.2% 6.0% 1,029,972,818 36,104,468 Core Plus

Public Equity 10,273,338,258 59.4% 62.5% 10,803,910,683 (530,572,425) Public Equity

Domestic Equity 7,412,395,787 42.9% 43.5% 7,519,521,835 (107,126,049) Domestic Equity

Large Cap 3,910,583,270 22.6% 23.3% 4,025,537,121 (114,953,850) Large Cap

SAWGRASS LG CAP 219,563 0.0% 0.0% ‐ 219,563 Growth

HOTCHKIS & WILEY LG CAP 1,678,594 0.0% 0.0% ‐ 1,678,594 Value

NT RUSSELL 1000 1,571,097,188 9.1% 9.3% 1,607,621,910 (36,524,722) Passive

SCI BETA US HFE MBMS 2,337,587,926 13.5% 14.0% 2,420,075,993 (82,488,067) Factor

Mid Cap 1,863,157,449 10.8% 10.6% 1,830,182,470 32,974,979 Mid Cap

ARONSON, JOHNSON & ORTIZ 445,240,593 2.6% 2.6% 457,545,617 (12,305,024) Core

FRONTIER MID CAP 505,342,762 2.9% 2.6% 457,545,617 47,797,145 Growth

WELLINGTON MID CAP 544,765,965 3.2% 2.6% 457,545,617 87,220,347 Growth

HOTCHKIS & WILEY MID CAP 367,808,128 2.1% 2.6% 457,545,617 (89,737,489) Value

Small Cap 1,638,655,067 9.5% 9.6% 1,663,802,245 (25,147,178) Small Cap

SHAPIRO CAP SMALL CAP 729,271,154 4.2% 4.7% 815,263,100 (85,991,947) Core

GENEVA CAPITAL 218,146,610 1.3% 1.2% 212,134,786 6,011,824 Growth

WASATCH ADV SMALL CAP 226,971,482 1.3% 1.2% 212,134,786 14,836,696 Growth

FRONTIER CAP SMALL CAP 212,719,349 1.2% 1.2% 212,134,786 584,563 Value

NEUMEIER POMA SMALL CAP 251,546,472 1.5% 1.2% 212,134,786 39,411,686 Value

International Equity 2,860,942,471 16.6% 19.0% 3,284,388,848 (423,446,376) International Equity

Int'l Large Cap 2,000,686,052 11.6% 11.9% 2,052,743,030 (52,056,977) Int'l Large Cap

ALLIANZ INTL 1,001,220,201 5.8% 6.2% 1,067,426,375 (66,206,175) Factor

WELLINGTON INTLGR EQ 527,689,270 3.1% 2.9% 492,658,327 35,030,943 Growth

CAUSEWAY CAPITAL 471,776,582 2.7% 2.9% 492,658,327 (20,881,745) Value

Int'l Small Cap 860,256,419 5.0% 7.1% 1,231,645,818 (371,389,399) Int'l Small Cap

EPOCH INTL ‐ 0.0% 0.0% ‐ Core

WASATCH INTL 327,094,538 1.9% 1.8% 307,911,454 19,183,084 Core

WELLINGTON INTL 267,148,479 1.5% 1.8% 307,911,454 (40,762,975) Core

SSGA EMSC 265,139,667 1.5% 1.8% 307,911,454 (42,771,787) Emerging Market

Real Estate 1,236,624,632 7.2% 9.0% 1,555,763,138 (319,138,506) Real Estate

Core RE 798,747,502 4.6% 4.5% 777,881,569 20,865,932 Core RE

AEW CORE PROPERTY TRUST 325,398,333 1.9% 1.5% 259,293,856 66,104,477 Core

L&B CORE INCOME 146,061,860 0.8% 1.5% 259,293,856 (113,231,996) Core

HEITMAN AMERICA REAL ESTATE 327,287,308 1.9% 1.5% 259,293,856 67,993,452 Core

Non Core RE 437,877,131 2.5% 4.5% 777,881,569 (340,004,438) Non Core RE 804,100,000

AMERICAN STRATEGIC VALUE 66,249,856 0.4% Value Add 53,750,000

ANGELO GORDON X 7,300,620 0.0% Value Add ‐ Global 60,000,000

ARTEMIS REAL ESTATE III 6,753,171 0.0% Value Add 50,000,000

DUNE REAL ESTATE III 54,577,457 0.3% Value Add 53,750,000

DUNE REAL ESTATE IV 4,126,939 0.0% Value Add 60,000,000

FCP REALTY 6,634,014 0.0% Value Add 35,000,000

GREENOAK US II 37,835,027 0.2% Value Add 50,000,000

GREENOAK US III 14,319,756 0.1% Value Add ‐ Constr. 60,000,000

HARBERT EUROPEAN REAL ESTATE V 10,005,383 0.1% Value Add ‐ Europe 44,100,000

HARVEY PARKWAY BUILDING 13,350,000 0.1% Value Add

INVESCO STRATEGIC OPPS 14,433,256 0.1% Value Add ‐ Global 60,000,000

L&B GOLDEN DRILLER 84,641,522 0.5% Senior Housing 75,000,000

LANDMARK REAL ESTATE VII 16,248,720 0.1% Value Add 35,000,000

Lyrical‐OTRS Realty Partner IV 63,272,555 0.4% Value Add 53,750,000

STARWOOD OPPORTUNITY X 26,142,269 0.2% Value Add 53,750,000

STARWOOD OPPORTUNITY XI 11,986,586 0.1% Value Add 60,000,000

Private Capital 1,565,116,309 9.1% 6.5% 1,123,606,711 441,509,598 Private Capital 2,112,500,000

Private Equity 1,256,847,802 7.3% Private Equity 1,587,500,000

LEGACY LP 14,623,072 0.1% Legacy 97,500,000

FRANKLIN PARK 1,242,224,730 7.2% Fund of Funds 1,490,000,000

Private Debt 308,268,507 1.8% Private Debt 525,000,000

PIMCO BRAVO III 144,942,465 0.8% Debt ‐ Mtge 175,000,000

PIMCO BRAVO II 73,351,215 0.4% Debt ‐ Mtge 150,000,000

PIMCO BRAVO 1,539,992 0.0% Debt ‐ Mtge 100,000,000

PIMCO COF II 88,434,835 0.5% Debt ‐ Credit 100,000,000

Grand Total 17,286,257,093 100.0% 100.0%

% of

fundComposites & Accounts Market Value Target % Target ($) Over (Under) Committed Capital

Current Portfolio vs Policy Targets

Mandate Style

as of December 03, 2019

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AndCo Consulting | 4901 Vineland Road | Suite 600 | Orlando, FL 32811 | (844) 44-ANDCO | AndCoConsulting.com

At the September and October Investment Committee and Board Meetings for the Teachers’ Retirement System of Oklahoma (“TRSO” or the “Fund”), AndCo reviewed the history and funding status of the real estate portfolio. The discussion included a summary our plan to fulfill the Fund’s 9% real estate allocation with a strategic shift from approximately 75% core and 25% non-core investments to an equal allocation between the two strategies. We reviewed the Fund’s activity over the last two years, which included eight new commitments allocated to non-core strategies, a planned reduction in the current core portfolio and the request to conduct a Request For Proposal (“RFP”) for a new allocation to one or two open-end non-core real estate funds. In addition to the prospective commitments resulting from the RFP, we expect the Fund will consider future commitments to existing managers’ follow-on offerings. Lastly, we discussed a follow-on commitment to the Fund’s current, and only open-end, non-core investment with American Realty Strategic Value Fund (“SVF”). Key statistics: American’s SVF is currently completing its 10th year in operations with approximately $1.9 billion of gross assets ($1.1 billion net) and nearly 30 active investments. The portfolio is well diversified by property type and geographic region, comprised of more than 6 million feet of commercial space and more than 1,000 multi-family units. Since inception, SVF has outperformed the NCREIF-ODCE by more than 200 bps. Considerations:

1. Established Fund. SVF has performed well and continues to grow in size. 2. Non-core Strategy. SVF is consistent with AndCo’s strategic plan for TRSO’s portfolio. 3. Fee reduction. Commitments greater than $100 million receive a reduced management

fee. 4. Deployment of Capital. SVF anticipates that 10% of the commitment will be called at the

beginning of the year and the remainder will be called over the next two to three quarters. 5. Liquidity. While an open-end fund, TRSO will represent approximately 10% of SVF’s AUM. 6. Exposure. With a follow-on commitment, SVF will represent roughly 6% of the Fund’s

real estate portfolio and about 13% of its non-core strategy. AndCo recommends the TRSO Board approve a follow-on commitment of $40 million to the American Realty Strategic Value Fund.

To: Teachers’ Retirement System of Oklahoma – Trustees & Staff From: Peter Brown, Doug Anderson Date: December 10, 2019 Re: American Realty Strategic Value Realty Fund

From:

Date:

Re:

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Page

33

of 1

07

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ket U

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nly

and

sho

uld

not b

e re

gar

ded

as

inve

stm

ent

ad

vice

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form

atio

n is

ba

sed

on

sou

rce

s an

d d

ata

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ved

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e re

liab

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ut

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ng c

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t gu

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tee

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e in

form

atio

n. T

he m

ater

ial p

rovi

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he

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alid

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ly a

s of

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te o

f dis

trib

utio

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nd

not a

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ture

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te.

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201

8 S

ect

or

Re

turn

s

Page

34

of 1

07

Nov

embe

r 201

9 Pe

rform

ance

Upd

ate

(Pre

limin

ary

Ret

urns

)

Fi

nanc

ial m

arke

ts w

ere

mos

tly h

ighe

r dur

ing

Nov

embe

r, ex

tend

ing

2019

gai

ns, w

ith d

omes

tic s

mal

l cap

equ

ities

lead

ing

all o

ther

asse

t cla

sses

.H

owev

er, f

or th

e ye

ar to

dat

e pe

riod,

dom

estic

larg

e ca

p eq

uitie

s co

ntin

ue to

lead

with

the

Rus

sell

1000

Inde

xou

tper

form

ing

all o

ther

ass

et c

lass

es w

ith a

n im

pres

sive

retu

rn o

f 27.

7%.

Fo

r the

mon

th, g

row

th s

tock

s ou

tper

form

ed v

alue

sto

cks

for a

ll ca

pita

lizat

ions

, con

tinui

ng a

tren

d th

at h

as p

ersi

sted

for m

ost o

f20

19.

D

urin

g N

ovem

ber,

the

thre

e to

p pe

rform

ing

sect

ors

of th

e R

usse

ll 10

00 w

ere

Hea

lth C

are

(retu

rn +

5.8%

), In

form

atio

n Te

chno

logy

+5. 7

%) a

nd F

inan

cial

s (+

5.0%

). T

he p

oore

st p

erfo

rmer

s w

ere

defe

nsiv

e se

ctor

s: U

tiliti

es (r

etur

n ‐1

.8%

), R

eal E

stat

e (‐1

.4%

) and

Con

sum

er S

tapl

es (+

1.3%

).

In

tern

atio

nal e

quity

retu

rns

cont

inue

to b

e m

uted

rela

tive

to th

eir d

omes

tic c

ount

erpa

rts w

ith th

e M

SCI E

AFE

up 0

.90%

and

the

MSC

I EM

dow

n -0

.14%

dur

ing

Nov

embe

r. F

or th

e ye

ar to

dat

e, b

oth

deve

lope

d an

d em

ergi

ng m

arke

t ret

urns

wer

e po

sitiv

e w

ith

gain

s of

18.

7% a

nd 1

0.2%

, res

pect

ivel

y.

Bo

nds

wer

e es

sent

ially

flat

dur

ing

Nov

embe

r as

dem

and

for l

ow ri

sk a

sset

s fe

ll. T

he b

road

mar

ket A

ggre

gate

Bon

d In

dex

fell

0.05

% fo

r the

per

iod,

brin

ging

its

year

to d

ate

retu

rn d

own

to 8

.8%

.Th

e 3-

mon

th T

-bill

ende

d th

e m

onth

with

a y

ield

of 1

.63%

,0.

58%

low

er th

an th

e 30

-yea

r Tre

asur

y Bo

nd.

Th

e O

TRS

Tota

l Fun

d, in

clud

ing

illiqu

id a

lloca

tions

, ear

ned

1.6%

dur

ing

Nov

embe

r (ne

t of f

ees)

whi

ch tr

aile

d th

e po

licy

benc

hmar

k’s

retu

rn o

f 2.1

%.

The

Mar

keta

ble

Asse

ts C

ompo

site

gai

ned

1.9%

vs.

its

benc

hmar

k re

turn

of 1

.8%

.

Al

l seg

men

ts o

f the

TR

SO e

quity

por

tfolio

enj

oyed

gai

ns d

urin

g N

ovem

ber.

Ove

r the

trai

ling

year

, per

form

ance

con

tinue

d to

be

clos

ely

corre

late

d w

ith s

ize:

the

cap

wei

ghte

d in

dex

portf

olio

with

a re

turn

+16

.1%

out

perfo

rmed

the

mid

cap

com

posi

te b

y 5.

0%,

the

smal

l cap

com

posi

te b

y 8.

4%, a

nd th

e no

n-ca

p w

eigh

ted

inde

x po

rtfol

io b

y 2.

3%.

For t

he s

ame

perio

d, g

row

th s

tock

sou

tper

form

ed v

alue

sto

cks

by ro

ughl

y tw

o to

one

am

ong

all t

hree

cap

italiz

atio

n gr

oups

. Th

e te

n-ye

ar o

bser

vatio

n pe

riod

saw

hist

oric

ally

wid

e re

turn

dis

pers

ions

bet

wee

n co

mpa

rabl

e gr

owth

and

val

ue in

dexe

s.

Th

e to

tal d

omes

tic e

quity

com

posi

te g

aine

d 3.

1% fo

r the

mon

th, t

railin

g its

ben

chm

ark

by 0

.8%

. Th

e to

tal i

nter

natio

nal e

quity

com

posi

te o

utpe

rform

ed it

s be

nchm

ark

(1.5

% v

s. 1

.0%

) whi

le th

e to

tal b

ond

com

posi

te o

utpe

rform

ed d

urin

g N

ovem

ber b

y 0.

1%.

The

top

two

perfo

rmin

g su

b-co

mpo

site

s du

ring

Nov

embe

r wer

e th

e D

omes

tic C

ap W

eigh

ted

Inde

x (+

3.8%

) and

the

Dom

estic

Activ

e M

id C

ap C

ompo

site

(+3.

6%).

Th

e to

tal f

und

com

posi

te e

nded

Nov

embe

r with

a m

arke

t val

ue o

f $17

,412

,480

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.D

urin

g th

e m

onth

, the

com

posi

te a

ppre

ciat

edby

$25

3 m

illion

and

gen

erat

ed in

com

e of

$28

milli

on. F

or th

e pe

riod,

con

tribu

tions

tota

led

$76

milli

on a

nd d

istri

butio

ns w

ere

$178

milli

on.

Page

35

of 1

07

Co

mp

ara

tiv

e P

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an

ce

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ilin

g O

ne

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To

tal

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nd

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turn

11

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of

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t o

f fe

e r

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Page

36

of 1

07

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se

t A

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37

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Dis

clos

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AndC

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mpi

led

this

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r the

sol

e us

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the

clie

nt fo

r whi

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pre

pare

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o is

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for e

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e pe

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lts o

f the

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vest

men

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eir p

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rman

ce w

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dice

s an

d ot

her r

elat

ed p

eer u

nive

rse

data

that

is d

eem

ed a

ppro

pria

te.

AndC

o us

es th

e re

sults

from

this

eva

luat

ion

to m

ake

obse

rvat

ions

and

reco

mm

enda

tions

to th

e cl

ient

.

AndC

o us

es ti

me-

wei

ghte

d ca

lcul

atio

ns w

hich

are

foun

ded

on s

tand

ards

reco

mm

ende

d by

the

CFA

Inst

itute

. Th

e ca

lcul

atio

ns a

nd v

alue

s sh

own

are

base

d on

info

rmat

ion

that

is re

ceiv

ed fr

om c

usto

dian

s. A

ndC

o an

alyz

es tr

ansa

ctio

ns a

s in

dica

ted

on th

e cu

stod

ian

stat

emen

ts a

nd re

view

s th

e cu

stod

ial m

arke

t val

ues

of th

e po

rtfol

io.

As a

resu

lt, th

is p

rovi

des

AndC

o w

ith a

reas

onab

le b

asis

that

the

inve

stm

ent i

nfor

mat

ion

pres

ente

d is

free

from

mat

eria

l mis

stat

emen

t. T

his

met

hodo

logy

of e

valu

atin

g an

d m

easu

ring

perfo

rman

ce p

rovi

des

AndC

o w

ith a

pra

ctic

al fo

unda

tion

for o

ur o

bser

vatio

ns a

nd re

com

men

datio

ns.

Not

hing

cam

e to

ou

r atte

ntio

n th

at w

ould

cau

se A

ndC

o to

bel

ieve

that

the

info

rmat

ion

pres

ente

d is

sig

nific

antly

mis

stat

ed.

This

per

form

ance

repo

rt is

bas

ed o

n da

ta o

btai

ned

by th

e cl

ient

’s c

usto

dian

(s),

inve

stm

ent f

und

adm

inis

trato

r, or

oth

er s

ourc

es b

elie

ved

to b

e re

liabl

e. W

hile

thes

e so

urce

s ar

e be

lieve

d to

be

relia

ble,

the

data

pr

ovid

ers

are

resp

onsi

ble

for t

he a

ccur

acy

and

com

plet

enes

s of

thei

r sta

tem

ents

. Clie

nts

are

enco

urag

ed to

com

pare

the

reco

rds

of th

eir c

usto

dian

(s) t

o en

sure

this

repo

rt fa

irly

and

accu

rate

ly re

flect

s th

eir v

ario

us

asse

t pos

ition

s.

The

stra

tegi

es li

sted

may

not

be

suita

ble

for a

ll in

vest

ors.

We

belie

ve th

e in

form

atio

n pr

ovid

ed h

ere

is re

liabl

e, b

ut d

o no

t war

rant

its

accu

racy

or c

ompl

eten

ess.

Pas

t per

form

ance

is n

ot a

n in

dica

tion

of fu

ture

pe

rform

ance

. An

y in

form

atio

n co

ntai

ned

in th

is re

port

is fo

r inf

orm

atio

nal p

urpo

ses

only

and

sho

uld

not b

e co

nstru

ed to

be

an o

ffer t

o bu

y or

sel

l any

sec

uriti

es, i

nves

tmen

t con

sulti

ng, o

r inv

estm

ent m

anag

emen

t se

rvic

es.

Addi

tiona

l inf

orm

atio

n in

clud

ed in

this

doc

umen

t may

con

tain

dat

a pr

ovid

ed b

y fro

m in

dex

data

base

s, p

ublic

eco

nom

ic s

ourc

es a

nd th

e m

anag

ers

them

selv

es.

This

doc

umen

t may

con

tain

dat

a pr

ovid

ed b

y Bl

oom

berg

Bar

clay

s.

Bloo

mbe

rg B

arcl

ays

Inde

x da

ta p

rovi

ded

by w

ay o

f Bar

clay

s Li

ve.

This

doc

umen

t may

con

tain

dat

a pr

ovid

ed b

y St

anda

rd a

nd P

oor’s

. N

othi

ng c

onta

ined

with

in a

ny d

ocum

ent,

adve

rtise

men

t or p

rese

ntat

ion

from

S&P

Indi

ces

cons

titut

es a

n of

fer o

f ser

vice

s in

juris

dict

ions

whe

re

S&P

Indi

ces

does

not

hav

e th

e ne

cess

ary

licen

ses.

All

info

rmat

ion

prov

ided

by

S&P

Indi

ces

is im

pers

onal

and

is n

ot ta

ilore

d to

the

need

s of

any

per

son,

ent

ity o

r gro

up o

f per

sons

. Any

retu

rns

or p

erfo

rman

ce

prov

ided

with

in a

ny d

ocum

ent i

s pr

ovid

ed fo

r illu

stra

tive

purp

oses

onl

y an

d do

es n

ot d

emon

stra

te a

ctua

l per

form

ance

. Pas

t per

form

ance

is n

ot a

gua

rant

ee o

f fut

ure

inve

stm

ent r

esul

ts.

This

doc

umen

t may

con

tain

dat

a pr

ovid

ed b

y M

SCI,

Inc.

Cop

yrig

ht M

SCI,

2017

. U

npub

lishe

d. A

ll R

ight

s R

eser

ved.

Thi

s in

form

atio

n m

ay o

nly

be u

sed

for y

our i

nter

nal u

se, m

ay n

ot b

e re

prod

uced

or

redi

ssem

inat

ed in

any

form

and

may

not

be

used

to c

reat

e an

y fin

anci

al in

stru

men

ts o

r pro

duct

s or

any

indi

ces.

Thi

s in

form

atio

n is

pro

vide

d on

an

“as

is” b

asis

and

the

user

of t

his

info

rmat

ion

assu

mes

the

entir

e ris

k of

any

use

it m

ay m

ake

or p

erm

it to

be

mad

e of

this

info

rmat

ion.

Nei

ther

MSC

I, an

y of

its

affil

iate

s or

any

oth

er p

erso

n in

volv

ed in

or r

elat

ed to

com

pilin

g, c

ompu

ting

or c

reat

ing

this

info

rmat

ion

mak

es a

ny

expr

ess

or im

plie

d w

arra

ntie

s or

repr

esen

tatio

ns w

ith re

spec

t to

such

info

rmat

ion

or th

e re

sults

to b

e ob

tain

ed b

y th

e us

e th

ereo

f, an

d M

SCI,

its a

ffilia

tes

and

each

suc

h ot

her p

erso

n he

reby

exp

ress

ly d

iscl

aim

all

war

rant

ies

(incl

udin

g, w

ithou

t lim

itatio

n, a

ll w

arra

ntie

s of

orig

inal

ity, a

ccur

acy,

com

plet

enes

s, ti

mel

ines

s, n

on-in

fring

emen

t, m

erch

anta

bilit

y an

d fit

ness

for a

par

ticul

ar p

urpo

se) w

ith re

spec

t to

this

info

rmat

ion.

W

ithou

t lim

iting

any

of t

he fo

rego

ing,

in n

o ev

ent s

hall

MSC

I, an

y of

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affil

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oth

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erso

n in

volv

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pilin

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ompu

ting

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this

info

rmat

ion

have

any

liab

ility

for a

ny d

irect

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irect

, sp

ecia

l, in

cide

ntal

, pun

itive

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sequ

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l or a

ny o

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dam

ages

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ng, w

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t lim

itatio

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ven

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tifie

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f it m

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Page

50

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07

Compo

site

Market V

alue

Market A

llocatio

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catio

nMin % Allo

catio

nMax % Allo

catio

nCash and

Equ

ivalen

ts$3

63,288

,200

2.1%

0.0%

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$3,830

,663

,309

22.1%

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17.0%

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ity$7

,476

,146

,408

43.1%

43.5%

36.5%

50.5%

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ity$2

,885

,231

,227

16.6%

19.0%

14.0%

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$1,237

,836

,890

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9.0%

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$1,565

,114

,325

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4.5%

8.5%

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Total

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,280

,360

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,288

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$4,687

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,705

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,000

$6,336

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$8,766

,000

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2,84

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$3,298

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,000

$2,430

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$4,166

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%* Net of Fee

Returns

as of D

ecem

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5, 201

9Asset A

llocatio

n vs Policy Targets & Recen

t Perform

ance

Page

52

of 1

07

Cash 363,288,200.44 2.1% 0.0% ‐ 363,288,200 CashFixed Income 3,830,663,309 22.1% 22.0% 3,818,821,679 11,841,630 Fixed Income

HOISINGTON INVESTMENT 650,905,214 3.7% 4.1% 716,029,065 (65,123,850) DurationLOOMIS SAYLES CORE PLUS 1,054,675,279 6.1% 6.0% 1,034,264,205 20,411,075 Core PlusLORD ABBETT CORE PLUS 1,060,153,639 6.1% 6.0% 1,034,264,205 25,889,435 Core PlusMACKAY SHIELDS CORE PLUS 1,064,929,176 6.1% 6.0% 1,034,264,205 30,664,971 Core Plus

Public Equity 10,361,377,635 59.7% 62.5% 10,848,925,225 (487,547,590) Public EquityDomestic Equity 7,476,146,408 43.1% 43.5% 7,550,851,957 (74,705,549) Domestic EquityLarge Cap 3,943,010,339 22.7% 23.3% 4,042,309,539 (99,299,200) Large CapSAWGRASS LG CAP 219,584 0.0% 0.0% ‐ 219,584 GrowthHOTCHKIS & WILEY LG CAP 1,678,744 0.0% 0.0% ‐ 1,678,744 ValueNT RUSSELL 1000 1,582,933,790 9.1% 9.3% 1,614,320,073 (31,386,284) PassiveSCI BETA US HFE MBMS 2,358,178,222 13.6% 14.0% 2,430,159,250 (71,981,029) Factor

Mid Cap 1,878,151,825 10.8% 10.6% 1,837,807,933 40,343,892 Mid CapARONSON, JOHNSON & ORTIZ 449,749,189 2.6% 2.6% 459,451,983 (9,702,794) CoreFRONTIER MID CAP 509,202,081 2.9% 2.6% 459,451,983 49,750,097 GrowthWELLINGTON MID CAP 548,334,803 3.2% 2.6% 459,451,983 88,882,819 GrowthHOTCHKIS & WILEY MID CAP 370,865,753 2.1% 2.6% 459,451,983 (88,586,230) Value

Small Cap 1,654,984,244 9.5% 9.6% 1,670,734,485 (15,750,241) Small CapSHAPIRO CAP SMALL CAP 735,842,063 4.2% 4.7% 818,659,897 (82,817,834) CoreGENEVA CAPITAL 219,208,295 1.3% 1.2% 213,018,647 6,189,648 GrowthWASATCH ADV SMALL CAP 229,748,586 1.3% 1.2% 213,018,647 16,729,939 GrowthFRONTIER CAP SMALL CAP 214,933,693 1.2% 1.2% 213,018,647 1,915,046 ValueNEUMEIER POMA SMALL CAP 255,251,607 1.5% 1.2% 213,018,647 42,232,960 Value

International Equity 2,885,231,227 16.6% 19.0% 3,298,073,268 (412,842,041) International EquityInt'l Large Cap 2,014,342,840 11.6% 11.9% 2,061,295,793 (46,952,952) Int'l Large CapALLIANZ INTL 1,007,910,039 5.8% 6.2% 1,071,873,812 (63,963,773) FactorWELLINGTON INTLGR EQ 530,946,956 3.1% 2.9% 494,710,990 36,235,966 GrowthCAUSEWAY CAPITAL 475,485,845 2.7% 2.9% 494,710,990 (19,225,146) Value

Int'l Small Cap 870,888,387 5.0% 7.1% 1,236,777,476 (365,889,089) Int'l Small CapEPOCH INTL 5,347,540 0.0% 1.8% 309,194,369 (303,846,829) CoreWASATCH INTL 328,519,625 1.9% 1.8% 309,194,369 19,325,256 CoreWELLINGTON INTL 271,007,824 1.6% 1.8% 309,194,369 (38,186,545) CoreSSGA EMSC 265,139,667 1.5% 1.8% 309,194,369 (44,054,702) Emerging Market

Real Estate 1,237,836,890 7.1% 9.0% 1,562,245,232 (324,408,342) Real EstateCore RE 798,747,576 4.6% 4.5% 781,122,616 17,624,960 Core RE

AEW CORE PROPERTY TRUST 325,398,333 1.9% 1.5% 260,374,205 65,024,128 CoreL&B CORE INCOME 146,061,935 0.8% 1.5% 260,374,205 (114,312,271) CoreHEITMAN AMERICA REAL ESTATE 327,287,308 1.9% 1.5% 260,374,205 66,913,103 Core

Non Core RE 439,089,314 2.5% 4.5% 781,122,616 (342,033,302) Non Core RE 804,100,000 AMERICAN STRATEGIC VALUE 66,249,856 0.4% Value Add 53,750,000 ANGELO GORDON X 7,300,620 0.0% Value Add ‐ Global 60,000,000 ARTEMIS REAL ESTATE III 6,753,171 0.0% Value Add 50,000,000 DUNE REAL ESTATE III 54,577,457 0.3% Value Add 53,750,000 DUNE REAL ESTATE IV 4,126,939 0.0% Value Add 60,000,000 FCP REALTY 6,634,014 0.0% Value Add 35,000,000 GREENOAK US II 37,831,489 0.2% Value Add 50,000,000 GREENOAK US III 14,319,756 0.1% Value Add ‐ Constr. 60,000,000 HARBERT EUROPEAN REAL ESTATE V 9,796,762 0.1% Value Add ‐ Europe 44,100,000 HARVEY PARKWAY BUILDING 13,120,000 0.1% Value AddINVESCO STRATEGIC OPPS 14,433,256 0.1% Value Add ‐ Global 60,000,000 L&B GOLDEN DRILLER 84,641,522 0.5% Senior Housing 75,000,000 LANDMARK REAL ESTATE VII 16,248,720 0.1% Value Add 35,000,000 Lyrical‐OTRS Realty Partner IV 64,926,898 0.4% Value Add 53,750,000 STARWOOD OPPORTUNITY X 26,142,269 0.2% Value Add 53,750,000 STARWOOD OPPORTUNITY XI 11,986,586 0.1% Value Add 60,000,000

Private Capital 1,565,114,325 9.0% 6.5% 1,128,288,223 436,826,102 Private Capital 2,112,500,000 Private Equity 1,256,845,818 7.2% Private Equity 1,587,500,000 LEGACY LP 14,623,072 0.1% Legacy 97,500,000 FRANKLIN PARK 1,242,222,746 7.2% Fund of Funds 1,490,000,000

Private Debt 308,268,507 1.8% Private Debt 525,000,000 PIMCO BRAVO III 144,942,465 0.8% Debt ‐ Mtge 175,000,000 PIMCO BRAVO II 73,351,215 0.4% Debt ‐ Mtge 150,000,000 PIMCO BRAVO 1,539,992 0.0% Debt ‐ Mtge 100,000,000 PIMCO COF II 88,434,835 0.5% Debt ‐ Credit 100,000,000

Grand Total 17,358,280,360 100.0% 100.0%

% of fund

Composites & Accounts Market Value Target % Target ($) Over (Under) Committed Capital

Current Portfolio vs Policy Targets

Mandate Style

as of December 05, 2019

Page 53 of 107

Composites & Accounts Market Value MTD QTD YTD FYTD

Oklahoma Teachers' Total Fund 17,358,280,360 ‐0.36 2.40 16.37 2.93

Cash 363,288,200 0.03 0.65 2.50 1.23

Domestic Equity 3,535,034,397 ‐0.67 3.45 23.07 3.11

Active Mid Cap 1,878,151,825 ‐0.76 4.21 23.81 2.46ARONSON, JOHNSON & ORTIZ 449,749,189 ‐0.51 3.08 20.16 2.24FRONTIER MID CAP 509,202,081 ‐0.83 4.43 28.75 3.56WELLINGTON MID CAP 548,334,803 ‐0.94 6.06 36.84 6.90HOTCHKIS & WILEY MID CAP 370,865,753 ‐0.70 2.63 7.04 ‐4.55

Small Cap 1,654,984,244 ‐0.58 3.08 21.20 1.50SHAPIRO CAP SMALL CAP 735,842,063 ‐0.70 1.58 17.62 ‐0.63GENEVA CAPITAL 219,208,295 ‐1.24 4.82 25.82 2.27WASATCH ADV SMALL CAP 229,748,586 ‐0.55 6.44 32.97 6.21FRONTIER CAP SMALL CAP 214,933,693 ‐0.27 2.09 20.39 1.53NEUMEIER POMA SMALL CAP 255,251,607 0.06 3.95 19.06 3.05

Cap Weighted Index 1,582,933,790 ‐0.75 5.17 26.75 6.66RUSSELL 1000 1,582,933,790 ‐0.75 5.17 26.75 6.66

Non‐Cap Weighted Index 2,358,178,222 ‐0.62 2.02 23.82 5.33SCI BETA US HFE MBMS 6F 2,358,178,222 ‐0.62 2.02 23.82 5.33

International Equity 2,884,357,496 ‐0.01 5.15 16.27 2.77

Int'l Large Cap 2,014,342,840 ‐0.13 4.67 16.44 2.91ALLIANZ INTL 1,007,910,039 0.05 3.94 12.87 1.97WELLINGTON INTL 530,946,956 ‐0.36 4.36 22.95 3.48CAUSEWAY CAPITAL 475,485,845 ‐0.24 6.59 17.38 4.28

Int'l Small Cap 870,014,656 0.23 6.04 15.98 2.55EPOCH INTL 5,347,540 0.01 2.79 10.58 ‐0.21WASATCH INTL 328,519,625 0.08 9.73 28.51 5.87WELLINGTON INTL 271,007,824 0.77 8.41 19.37 6.45SSGA EMSC 265,139,667 0.00 2.54 5.13 ‐2.38

Fixed Income 3,830,663,309 ‐0.15 0.01 11.74 3.01

Active Duration 650,905,214 ‐0.93 ‐2.38 20.77 7.29HOISINGTON INVESTMENT 650,905,214 ‐0.93 ‐2.38 20.77 7.29

Core Plus Fixed Income 3,179,758,094 0.01 0.51 10.07 2.18LOOMIS SAYLES CORE PLUS FD 1,054,675,279 0.02 0.52 8.88 1.71LORD ABBETT CORE PLUS FD 1,060,153,639 ‐0.01 0.40 10.14 2.15MACKAY SHIELDS CORE PLUS FD 1,064,929,176 0.02 0.62 11.20 2.68

Investment Portfolio ReturnsNet of Fee as of December 05, 2019

Page 54 of 107

Investment Manager Total Market Value # of FirmsNORTHERN TRUST 4,304,400,211 WELLINGTON 1,350,289,583 FRANKLIN PARK 1,256,845,818 MACKAY SHIELDS 1,064,929,176 LORD ABBETT 1,060,153,639 LOOMIS SAYLES 1,054,675,279 ALLIANZ 1,007,910,039 SHAPIRO CAP 735,842,063 FRONTIER 724,135,773 HOISINGTON INVESTMENT 650,905,214 WASATCH 558,268,211 CAUSEWAY CAPITAL 475,485,845 ARONSON, JOHNSON & ORTIZ 449,749,189 HOTCHKIS & WILEY 372,544,496 HEITMAN REAL ESTATE 327,287,308 AEW REAL ESTATE 325,398,333 PIMCO 308,268,507 SSGA 265,139,667 NEUMEIER POMA 255,251,607 L&B REAL ESTATE 230,703,457 GENEVA CAPITAL 219,208,295 AMERICAN REALTY ADV 66,249,856 ANTHEUS CAPITAL 64,926,898 DUNE REAL ESTATE 58,704,396 GREENOAK REAL ESTATE 52,151,245 STARWOOD CAPITAL 38,128,855 LANDMARK REALTY ADV 16,248,720 INVESCO 14,433,256 TRS 13,120,000 HARBERT EUROPEAN REAL ESTATE V 9,796,762 ANGELO GORDON 7,300,620 ARTEMIS REAL ESTATE III 6,753,171 FCP Realty 6,634,014 EPOCH INVESTMENTS 5,347,540 ADVISORY RESEARCH 873,731 SAWGRASS 219,584 Grand Total 17,358,280,359 35

as of December 05, 2019Allocation by Investment Management Firm

Page 55 of 107

of 1

07

AndCo Consulting | 4901 Vineland Road | Suite 600 | Orlando, FL 32811 | (844) 44-ANDCO | AndCoConsulting.com

On December 4, 2019, Geneva Capital Management’s senior leadership contacted our firm to discuss an ownership event. Geneva Capital Management is a Milwaukee-based small cap growth manager that started managing a portfolio for TRSO in 2013. The portfolio has outperformed its benchmark since inception. During our call on December 4, 2019, Geneva’s senior leadership announced that the firm was entering into a purchase agreement with Janus Henderson, their current owner, to buy back their firm. The “repurchase” of their firm required internal and additional external capital. Geneva is working with Estancia Capital Management, LLC to purchase 100% of Janus Henderson’s equity interest in their organization. Estancia is a private equity group that focuses on the investment management industry. The firm will be a minority owner in Geneva Capital at the close of the transaction (expected closing date is February 28, 2020). Over time, Estancia’s equity interest in Geneva will be “earned out” or repurchased, with Geneva eventually owning 100% of their equity. This transaction does represent a “change in control” and will require an assignment of TRSO’s agreement. The transaction’s details are emerging, but based on our first two calls with Geneva, our initial impression is cautiously optimistic. A return of ownership and control to Geneva represents an improved alignment of their interests with TRSO’s. Geneva’s employees are investing substantial amounts of their own capital to buy back their firm. We have also learned that Estancia has earned the reputation of a beneficial operating partner. We are placing Geneva on the TRSO Watch List and will require regular updates from the firm. Our consulting and research teams are following the three firms involved in the transaction and will provide updates when necessary.

To: Teachers’ Retirement System of Oklahoma – Trustees & Staff From: Doug Anderson, Peter Brown Date: December 10, 2019 Re: Geneva Capital Management Ownership Change

From:

Date:

Re:

Page 57 of 107

Geneva Capital Management

100 E. Wisconsin Avenue, Suite 2550, Milwaukee, WI 53202 T (414) 224 6002 F (414) 224 9503

genevacap.com

Janus Henderson Distributors

December 4, 2019

Dear Client,

It is our pleasure to inform you that Geneva Capital Management and Janus Henderson have

entered into an agreement whereby certain members of the Geneva management team, in

partnership with Estancia Capital Management, LLC, will acquire 100% of the equity interests of

Geneva (the “Transaction”). The Transaction will return Geneva to its original roots as a

majority employee-owned organization and is structured in a manner to provide us a path to

complete employee ownership over time. We are partnering with Estancia to help facilitate the

transition. We expect the Transaction to be completed on or about February 28, 2020.

Estancia is a private equity firm which invests in financial service companies. We believe

Estancia’s industry knowledge, combined with their desire to help us grow the business, makes

them the perfect partner. Estancia will take a minority equity position in Geneva.

In order to help drive our growth following the closing of the Transaction, we plan on taking a

number of investment initiatives, including growing the investment team and investing in

distribution and infrastructure. Let us highlight important points regarding the Transaction:

Geneva’s entire investment and operations teams will remain the same.

Geneva’s management team will be the controlling owners of the business.

Geneva will continue to employ the same investment philosophy and process that has

been in place since 1987.

We will continue to serve you after the acquisition through our office in Milwaukee,

Wisconsin.

Your relationship will continue to be managed by the same portfolio managers as it is

today.

The fees, terms, and services under your investment advisory agreement will not

change as a result of the Transaction.

We would like to thank Janus Henderson for their support over the past five years. We are

excited by this opportunity and look forward to continuing to serve you, our client. With a

dedicated investment team, exemplary client service, and a focus on investing in high-quality

companies we believe Geneva has a bright future. If you have any questions regarding the

Transaction please contact Matt Pistorio at (414) 224-6002, and we will be happy to meet with

you.

Regards, Geneva Capital Management

Page 58 of 107

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Page

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Acco

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-Ca

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Page

69

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07

STINNETT & ASSOCIATES | 825 N. Broadway, Suite 420 | Oklahoma City, OK 73102 | PH 405.418.3700

Accounts Payable and P-card Review

2019 Report to Management

We want to thank everyone who assisted in the completion of this audit and appreciate the high level of cooperation we received, the genuine desire of all involved to identify opportunities to improve the process, and the willingness to address any issues as quickly as possible. If you have any questions or comments, please feel free to contact Hilaire Johnson or Kevin Wright at (918) 728-3300.

Page 70 of 107

Accounts Payable and P-Card Review Page | 1 Prepared by Stinnett & Associates

OBJECTIVES The objectives of this review were to assess the design and operating effectiveness of internal controls over the Accounts Payable and P-card processes and to review a sample of transactions to evaluate compliance with related policies, procedures, and state statutes.

SCOPE The scope of this review included significant aspects of the Accounts Payable and P-Card processes, such as invoice processing and cash disbursement. The review included activity from May 1, 2018 to August 31, 2019.

FOCUS AREAS The focus of the review was to:

• Assess the design and operating effectiveness of the accounts payable, including P-Cards, internal control environment.

• Perform data analytics to

identify spending anomalies, unusual transactions or transactions that did not comply with policies or state statutes.

TEAM MEMBERS Kevin Wright, Principal Hilaire Johnson, Manager Emily Adams, Associate

TABLE OF CONTENTS

I.EXECUTIVE SUMMARY 2

II.OPPORTUNITY FOR IMPROVEMENT 4

DISTRIBUTION: TRS Board of Trustees


CC: John Santos, Deputy Executive Director of Operations Sara Green, General Counsel Sam Moore, Chief Financial Officer

Lisa Van Liew, Assistant CFO

Page 71 of 107


I .EXECUTIVE SUMMARY

BACKGROUND AND APPROACH

UBACKGROUND

Accounts Payable (AP) for the Teachers’ Retirement System of Oklahoma (TRS) is administered by in-house staff responsible for requisitioning, procurement, invoice processing, and financial reporting. TRS utilizes the PeopleSoft system to manage the AP process, including the ePro module within PeopleSoft for requisitions. The disbursement of AP payments resides with the Oklahoma Office of Management and Enterprise Services (OMES) and the Office of the State Treasurer (OST) upon submission of properly approved claim vouchers.

TRS participates in the State’s authorized Purchase Card (P-Card) program in which designated TRS employees are issued P-Cards. The P-Card is used for low dollar purchases under $2,500. The P-Card Administrator can temporarily raise the transaction limit up to $5,000 in accordance with the State’s p-card rules issued by OMES. P-Cardholders initiate the P-Card expenses and the P-Card Administrator reviews the transactions as part of the monthly reconciliation. Currently, TRS has two P-Cardholders and the Chief Finance Officer (CFO) serves as the P-Card Administrator.

For the audit period May 1, 2018 to August 31, 2019, AP payments (exclusive of payroll expenditures and retirement benefit payments) totaled $3,073,517.06 representing 515 claim vouchers and 343 P-Card transactions occurred, totaling $83,532.48.

UAPPROACH

During the review, several process owners were interviewed to gain an understanding of the current processes. The following individuals were interviewed:

• Sam Moore, Chief Financial Officer • Lisa Van Liew, Assistant CFO/CPO • Jessica Malloy, Business Manager/CPO • Kaleb Jones, Senior Financial Accountant/CPO

In addition to conducting interviews, Internal Audit performed several procedures to ensure key controls were operating effectively. These procedures included, but were not limited to:

• Confirmed TRS personnel do not have system access to maintenance the vendor master file. • Reviewed a sample of Fund 200 reconciliations. • Reviewed a sample of processed claims and supporting documentation for approval. • Reviewed a sample of P-Card transactions and supporting documentation for approval.

To assess the operating effectiveness of controls, detail control testing was performed on AP payment transactions that occurred during September 1, 2018 through August 31, 2019. AP payments during this period (exclusive of payroll and retirement benefit payments) totaled $2,897,412.62 representing 466

Page 72 of 107


claim vouchers, and 252 transactions totaling $63,738.49 for P-card expenses. Detailed testing was performed on a sample of 25 claim voucher payments totaling $246,281.68 and 15 P-Card transactions totaling $1,817.72.

Data analytics were also performed on expenditures processed as claim vouchers or paid on the TRS’s P-Card during May 1, 2018 to September 31, 2019. The scope of the analytics did not include TRS’s retirement benefit disbursements or payroll expenditures. These procedures included, but were not limited to, the following:

• Evaluation of top vendors by dollar amount and by number of transactions • Comparison on employee travel reimbursements to p-card travel expenses • Comparison of vendor and employee addresses • Evaluation of Saturday and Sunday purchases • Benford’s Analysis to identify leading digit anomalies • Evaluation of vendors paid exclusively by P-Card

Additional testing as a result of the analytical procedures was performed on a sample of 5 claim voucher payments totaling $10,367.01 and 17 P-Card transactions totaling $13,026.71.

Page 73 of 107


I I .OPPORTUNITY FOR IMPROVEMENT

Overall, the results of the Accounts Payable and P-Card review indicate TRS has an internal control environment established to ensure expenditures are properly supported, approved, and comply with TRS procedures, OMES procedures, and State statutes. Internal Audit noted a potential improvement opportunity and provided management with a recommendation. This recommendation and management’s response are detailed below.

Observation 1 – CYMA

To facilitate the preparation of internal financial statements, TRS maintains an internal general ledger system, CYMA, in addition to the state of Oklahoma's accounting system, PeopleSoft. Monthly, Finance personnel manually record Fund 200 and P-Card transactions into CYMA. For the period May 2018 to August 2019 there were an average of 60 transactions per month that were manually recorded into CYMA.

BUSINESS IMPACT

Manual entries increase the risk that errors could occur. Furthermore, the existing manual process could be inefficient.

RECOMMENDATION

The CYMA website appears to indicate users can utilize CVS files to upload information to CYMA. Management should contact CYMA to investigate this functionality further to evaluate whether the transactions can be uploaded directly instead of entered manually. Should the upload option be implemented, management should ensure the Senior Financial Accountant has Fund 200 and P-Card transactions available in an electronic format to facilitate this upload.

Management Response Person Responsible

Estimated Completion Date

Staff has researched the processes that are required to use an export and import process from PeopleSoft to CYMA. Data is not captured in PeopleSoft with the details necessary for how TRS conducts accounting. Information would need to be manually added to an import file and formulas used to format the file as needed for CYMA. This would be a very labor-intensive monthly process and not mitigate the concern noted in the observation. The added complexity could result in errors, where the current process is well known and works efficiently under the conditions.

Sam Moore, CFO/Controller

Completed

U

Page 74 of 107

Chapter 2 - Mission and Vision Statements

The Board of Trustees adopted the following as the Mission Statement of the Oklahoma Teachers

Retirement System at the regular Board meeting on September 26, 2012. The Mission of the

Teachers’ Retirement System of Oklahoma is:

We collect, protect and grow assets to provide a secure retirement income for

public education employees.

Further, the Board approved the following Vision Statement, which provides insight on major

themes and objectives for the organization in the next three years. The Vision of OTRS the

Teachers’ Retirement System of Oklahoma is to:

Provide quality service to our clients members in an efficient,

economical manner,

Provide our clients members on-demand and accurate access to their

personal financial information,

Educate our clients members about their retirement benefits, and

Manage the assets of the plan competently and prudently while

achieving long-term risk-adjusted net returns in excess of market

benchmarks, and

Inform our clients members about the financial status of OTRS so they

will be confident in our ability to provide their benefits.

Page 75 of 107

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77

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07

Chapter 7 – Board Organization and Administration

Administration of Meetings

1. In the absence of specific Board policy, the procedural conduct of Board and committee

meetings is committed to the sound discretion of the Chair using Robert’s Rules of Order

as a procedural reference.

2. The concurrence of the majority of the members of the Board shall be necessary for the

Board or one of its committees to take an action.

3. A quorum of the Board shall consist of the majority of its 14 voting members. It shall in

all circumstances require the presence of 8 voting members of the Board to constitute a

quorum. In determining whether a quorum is present, vacant positions on the Board shall

not affect the required number of members to attain quorum. A Trustee is “present” for

purposes of calculating the necessary number of votes for an action when that member is

physically present in the meeting room.

4. A quorum of a Committee of the Board shall consist of the majority of its members. In

determining whether a quorum of the Committee is present, vacant positions on the

committee shall not be considered. A Board or committee member is “present” for

purposes of calculating the necessary number of votes for an action when that member is

physically present in the meeting room.

5. In the absence of the Chair, the Vice-chair shall assume all responsibilities and authority

of the Chair. In the absence of the Chair and Vice-chair, the members present shall elect

an acting Chair for the meeting.

6. If, during the course of a meeting, it comes to the attention of the Chair that a member is

apparently temporarily absent from the meeting, the Chair may in his or her own discretion

and without benefit of a motion cause the meeting to be recessed until the member returns

or such other time that the Chair is satisfied that the meeting may continue.

Notice of Meetings

The Board shall comply with the provisions of the Oklahoma Open Meeting Act. Any gathering

of a quorum of this Board or a committee thereof where business is to be transacted or discussed

shall be noticed pursuant to the provisions of the Oklahoma Open Meetings Act. This requirement

does not apply to informal gatherings such as conferences and social activities provided that no

official business is discussed. The regular Board and Committee meeting schedule is prepared by

staff and approved by the Board in November each year for the next calendar year. After approval

of the regular Board meeting schedule, it shall be submitted to the Secretary of State’s Office in

accordance with the Oklahoma Open Meetings Act. Agendas for regular meetings of the Board

or its Committees shall be posted at least 24 hours prior to the meeting in accordance with the

Oklahoma Open Meetings Act. Agendas for special meetings shall be posted no less than 48 hours

in advance of the meeting. Other, shorter notice requirements may be applicable in special

situations under the Act.

Page 78 of 107

Agendas

1. Board agendas shall be prepared by staff under the general direction of the Executive

Director. However, the Board Chair shall be the final authority in determining whether or

not an item is placed on the agenda.

2. The Board agendas should include an item for comments/questions from trustees but

should not include a specific agenda item for public comment. During the meeting the

Board Chair, in his or her discretion, may recognize a member of the public to comment

regarding an item on the Board agenda.

3. All agenda items shall be identified initially as either action items or informational items.

The Board Chair or Committee Chair is responsible for time management of the applicable

body.

4. All items on Board and Committee agendas shall be supported by concise, easily accessible

information when appropriate.

5. All Trustees shall receive in advance of any meeting copies of all Committee agendas and

supporting information.

6. Following each Committee meeting, the Committee Chair, in consultation with staff, will

prepare a brief summary of Committee actions to be presented to Trustees in a report to be

given at the open or closed session of the Board meeting as appropriate.

Minutes

The Board chair shall have an opportunity to review the minutes prior to distribution to other

Trustees and preferably within three weeks following the meeting. The minutes will reflect the

deliberative discussions of the board and its committees, the decisions reached, and the action

taken.

Executive Session Policy

The Board shall limit the business it conducts in executive session to those matters specifically

authorized by the Oklahoma Open Meetings Act. Pursuant to the Act, matters properly considered

in executive session include, but are not limited to, the following:

1. The appointment, employment, evaluation of performance, or dismissal of a public

employee.

2. Matters pertaining to the recruitment, appointment, employment, or removal of the

Executive Director or the General Counsel.

3. To deliberate on proposed decisions relating to administrative hearings/member

grievances.

Page 79 of 107

4. To confer with, or receive advice from, legal counsel regarding pending litigation, when

discussion in open session concerning those matters would prejudice the position of the

Board in the litigation.

Executive sessions of the Board and its committees shall be limited to Trustees and only those

other persons who are required by the Board.

Administrative Hearings Policy

Applicability

This policy applies to hearings before the Board where it has rejected or seeks to modify the

Proposed Decision rendered by an Administrative Law Judge (ALJ) and has decided to hear the

matter itself on the written record and has further decided to take additional evidence.

Scope of Review

In many instances the Board limits its review to the administrative record of the hearing before the

ALJ. However, in those instances where the Board has decided to consider the taking of additional

evidence, the Board will confine this evidence to newly discovered documentary evidence which

could not, with reasonable diligence, have been discovered and produced at the hearing.

Evidence

If the Board has made the decision to take additional evidence, the parties shall exchange such

evidence and lodge a copy with the Secretary of the Board no later than 10 business days prior to

the date of the meeting of the Board at which the matter will be considered. Such evidence shall

be accompanied by a complete, clear, and legible copy of any such documentary evidence and a

statement which shows:

1. Good cause exists as to why the evidence could not, with reasonable diligence, have been

discovered and produced at the original administrative hearing;

2. The evidence to be introduced is relevant to the resolution of some material issue in the

administrative appeal; and

3. The evidence is admissible and relevant to the matters at issue.

The Board will determine at the time of its meeting, whether or not the new evidence will be

considered.

Procedure for Hearing before the Board

1. In accordance with the Oklahoma Open Meeting Act, all administrative appeal hearings on

the record will be held in Open Session.

2. Appellant, having the burden of proof, will present his or her argument first. Appellant

will be allowed 10 minutes to present his or her argument and may divide his or her time

Page 80 of 107

to reserve time for rebuttal. Respondent will then have 10 minutes to present his or her

argument. If the Appellant has reserved a portion or his or her time for rebuttal, Appellant

may close the argument using the reserved time.

3. Thereafter, the Board may move into Executive Session for deliberation. Upon returning

from Executive Session, the Board may elect to take a final action.

4. A final administrative decision/order will be prepared and served by certified mail on

Respondent(s).

Election of Officers

1. In May April of each year, the current Board Chair shall appoint an ad-hoc Nomination

Committee. This Committee shall be comprised of at least three (3) Trustees not currently

serving as Board Officers. The Nomination Committee shall make recommendations to

the Board at the June May Board meeting of candidates for each Board Officer position.

Nominations shall also be taken from any Trustee at the June May meeting.

2. The election of the Board Chair, Vice-Chair, and Secretary shall be held at the regularly

scheduled Board meeting in June May of each calendar year. Officers will assume their

positions immediately after the June at the July meeting and serve through the June meeting

of the following year. While a typical officer term is one year to allow rotation of leadership

among Board members, officers are not precluded from being elected to additional yearly

terms.

3. When necessary, because of an unexpected vacancy, loss of confidence in the individual,

or because an officer can no longer perform the required duties, intervening elections may

be called by a 2/3rd majority of the Board. In determining the 2/3rd majority, vacant

positions on the Board shall not be considered.

4. The election of the Board Chair, Vice-Chair, and Secretary shall be by majority vote of the

Board with a run-off to be held in the event that no candidate receives a majority of the

first ballot.

5. Because of the complexity of the Board Chair position, it normally is expected that the

Board Vice Chair will stand for election to Chair after serving one year in the Vice Chair

role. The individual who seeks to run for the Vice Chair position should take this prospect

into consideration when agreeing to stand for election to Vice Chair.

Committees

1. Committee assignments and chairs shall be appointed by the Board Chair annually at the

July Board meeting and at such other times as vacancies occur. The Chair’s appointments

shall be set forth on the agenda as a separate item. Alternate members may be appointed

on an as-needed basis by the Chair.

2. All Trustees are encouraged to attend Committee meetings, but only Committee members

may vote.

Page 81 of 107

Charters

The following charters are attached:

1. Audit Committee

2. Investment Committee

3. Governance Committee

Audit Committee Charter

Purpose

The Audits and Risk Management Committee has been established to assist the Teachers’

Retirement Board in fulfilling its fiduciary oversight responsibilities for the:

1. Internal Audit Process,

2. System of Internal Control,

3. Financial Reporting Process,

4. System of Risk Management,

5. External Audit of the Financial Statements, and

6. Engagements with Other External Firms.

Authority

The Audit Committee shall have the authority to recommend to the Board for action:

1. The appointment of and provision for the compensation of, and oversee the work of the

independent certified public accounting firm employed by the Teachers’ Retirement

System to audit the financial statements.

2. The retention of consultants, experts, independent counsel, and accountants to advise the

Committee on any of its responsibilities or to assist in the conduct of an investigation.

3. Requests to provide oversight of audit and investigation activities of financial, ethical,

and/or fraud matters.

4. All Committee actions must be ratified or adopted by the Board to be effective.

Composition

The Committee shall be composed of a minimum of three (3) members, appointed by the Chair of

the Board.

Page 82 of 107

Meetings

The Committee will meet at least once a year, with authority to convene additional meetings as

determined by the Committee Chair in consultation with the Board Chair.

Responsibilities

The Audits Committee shall have responsibility for the following:

1. Designating at least one member as the “audit committee financial expert,” as defined by

the Securities and Exchange Commission. The member’s knowledge should include an

understanding of generally accepted accounting principles for public pension funds issued

by the Governmental Accounting Standards Board. If a financial expert is not available on

the Committee, an experienced professional will be selected possessing the qualities listed

in the Securities and Exchange Commission (SEC)’s “Audit Committee Financial Expert”

definition. Candidates for this non-voting position will be recommended by Oklahoma

Teachers Retirement System Executive Management and approved by the Board Chair.

2. Overseeing the reporting and integrity of all financial information reporting.

3. Providing the policy and framework for an effective system of enterprise-wide risk

management, and providing the mechanisms for periodic assessment of the system of risk

management.

4. Overseeing the assessment of internal administrative and accounting controls by both the

external independent financial statement auditor and internal auditors.

5. Ensuring management maintains an effective system of internal controls and provides the

mechanisms for periodic assessment of the system of internal controls.

6. Overseeing the appointment and work of the Internal Auditor and the work of the Internal

Audit Division.

7. Serving as the primary liaison and providing the appropriate forum for handling all matters

related to audits, examinations, compliance, investigations or inquiries of the Oklahoma

State Auditor and other appropriate State or Federal agencies.

8. Ensuring the independence of the external auditor and approve all auditing, other

attestations services and pre-approve non-audit services performed by an external audit

firm.

9. Reporting to the Board on all activities, findings and recommendations of the Committee.

10. Provide an open avenue of communication between internal audit, the external auditors

and the Committee and Board.

Page 83 of 107

Investment Committee Charter

Purpose

The Investment Committee has been established by the Teachers’ Retirement System Board to

administer all matters relating to the investment of the Fund’s assets and investment management.

The Committee is charged to administer the Fund’s assets for the exclusive purpose of providing

benefits to the participants and their beneficiaries within the system; and to maximize the financial

stability of the Funds in an efficient and cost effective manner. The Committee members will

carry out their duties with the care, skill, prudence, and diligence of a prudent person acting in a

similar institutional investment Trustee capacity, and strive to follow sound policies and

procedures that enhance good, fair, and open decision making. The Committee’s core objective is

to diversify the investments so as to minimize the risk of loss and to maximize the rate of return,

in accordance with the Board’s overall objective of promoting the best interests for Oklahoma

Teachers Retirement System, its Clients, retirees, and beneficiaries.

Authority

The Investment Committee shall have the authority to recommend to the Board for action:

1. All matters relating to the investment portfolio including, but not limited to, strategic asset

allocation, any tactical changes to the strategic asset allocation; pursuing new asset

categories, and changes to investment policy.

2. The engagement of investment advisors, consultants, managers and counsel as necessary;

to assist the Board in carrying out its responsibilities.

3. The Committee will not consider any proposed investment that has not gone through the

System’s due diligence process and been reviewed by the System’s professional staff.


Composition

The Committee shall be composed of a maximum of five (5) members, appointed by the Chair of

the Board.

Meetings

The Committee will meet at least four times a year, with authority to convene additional meetings

as determined by the Committee Chair in consultation with the Board Chair.

Responsibilities

The Investment Committee shall have responsibility for the following:

Page 84 of 107

1. Determining the Fund’s overall investment objectives, risk tolerance and performance

standards in accordance with the Oklahoma Constitution and the Teachers’ Retirement

Law.

2. Determining the asset allocation of the Fund, including consideration of asset classes and

sub-classes not currently utilized in the Fund.

3. Determining the overall Fund Investment Policy as well as asset class and program

investment policies.

4. Monitoring the performance of the investment portfolio as a whole as well as the

performance of each asset class, including the performance of internal and external

investment managers, and reviewing periodic reports from investment staff as well as

external consultants, advisors, and investment managers

5. Determine appropriate levels of staff delegation with respect to investment transactions in

the various asset classes of the Fund.

6. Determine and ensure compliance with the System’s corporate governance policies in an

effort to protect Oklahoma Teachers Retirement System assets through the pursuit of good

governance and operational accountability.

7. Determining the relative amount of internal and external management.

8. Monitoring the direct and indirect costs of each asset category.

9. Determining and ensuring compliance with the appropriate reporting standards and time

horizons.

10. Identifying and discussing potential legislation related to investments.

11. Ensuring that Teachers’ Retirement System investments are made in conformance with

applicable investment policies and investment resolutions.

Governance Committee Charter

Purpose

The Governance Committee has been established to assist the Teachers’ Retirement Board in

fulfilling its fiduciary oversight responsibilities for the administration and adoption of internal

governance principles and policies, and the monitoring thereof, including:

1. A comprehensive internal Ethics Policy

2. The Code of Conduct

3. Trustee Education Policy

4. Travel Expense Policy

5. The Board of Trustees Policy Manual

Page 85 of 107

6. Succession Planning involving the position of Executive Director

Authority

The Governance Committee shall have the authority to recommend to the Board for action:

1. Amendments to, or updates of: the Ethics Policy, the Code of Conduct, the Trustee

Education Policy, the Trustee Travel Expense Policy, and the Board of Trustees Policy

Manual.

2. Requests to provide oversight of investigation activities involving a Board Member

or other person with a contractual relationship to the OTRS Board.


Composition

The Committee shall be composed of a minimum of three (3) members, appointed by the Chair of

the Board.

Meetings

The Committee will meet at least four times a year, with authority to convene additional meetings as

determined by the Committee Chair in consultation with the Board Chair.

Responsibilities

The Governance Committee shall have responsibility for the following:

1. Ensuring and monitoring global compliance with the TRS Ethics Policy, the Code of

Conduct, and Board of Trustees Policy Manual.

2. Provide a yearly review of internal succession planning related to the position of

Executive Director at the June Trustee meeting.

3. Provide oversight of investigation activities involving a Board Member or other person

with a contractual relationship to the TRS Board, as delegated by the Board or Board

Chairman.

4. Monitoring whether the Executive Director has sufficient internal organizational

processes and accountabilities.

Page 86 of 107

of 107

M E M O R A N D U M

TO: TRS Board of Trustees

FROM: Tom Spencer, Executive Director

DATE: December 11, 2019

RE: Approval for Commencement of Selection Process for Pension Administration Software

----------------------------------------------------------------------------------------------------------------------------------------- The staff and Board of the Teachers’ Retirement System have discussed the need to replace the current pension administration software many times. The staff has summarized the history of “ALICE” at all three board retreats I’ve attended since I was hired in 2014. TRS selected a local software development firm to build our current system from scratch. The project started in 2010 with a goal to “go live” on January 1, 2012. It was not fully functional for the better part of 2012. The staff has worked with the firm since then making many enhancements and fixing many bugs. The software has many admirable features including a much-improved Member Portal that now provides benefit estimates, an annual statement, and permits our retirees to reprint their IRS 1099-R statements. The system has built in work flows that have helped efficiency. The document imaging retrieval works very well.

It is much better today since we brought in a project manager in 2014 who was here for a year and improved the development and bug fix process dramatically. We created a staging piece for modified software to be tested by users before being implemented. We have also gone through multiple changes of developers at the local firm that slows progress quite a bit. The complexity of public pension plans takes a while to master.

It is no secret that the staff has a strong opinion that we need to get replacement software, developed by a significant firm with experience and a strong track record. It could easily cost $3 to $5 million over the next several years to make that happen. By way of comparison, we have paid the local firm $5.4 million since 2010 for a product that isn’t really completed. The new project is in our Strategic Plan.

We have had an initial meeting with OMES staff who work with agencies that need to go through a competitive process to select a new software provider. I have asked our cabinet secretary David Ostrowe for his approval. An agency’s cabinet secretary must approve any proposed expenditures in excess of $25,000. The staff is seeking an affirmation of past approvals of moving forward with this project.

Page 88 of 107

CLIENT SERVICES PERFORMANCE METRICS THROUGH OCTOBER 2019

0

200

400

600

800

1000

1200

1400

1600

Num

ber o

f Req

uest

sESTIMATE REQUESTS THROUGH OCTOBER 2019

New Requests Completed Outstanding Avg. time = 112.64 hrs**Seminar Projections

83%

15%

2%

INFORMATION CENTER PERFORMANCE OCTOBER 2019

TOTAL CALLS QUEUED THROUGH THE OTRS

MAIN LINE : 6138

TOTAL E-MAILS RECEIVED THROUGH OTRS WEB LINK:

520

PORTAL CLIENTSWITH CONFIRMED PINs:

8109

INCOMINGE-MAILS: 392


520

913 Calls Routed Through Menu Options.

5107 Calls Answered. Average Speed of Answer: 12 seconds.Target Speed: 14 Seconds

118 Callers Abandoned in Queue. Average Abandon Time: 45 seconds.

CONFIRMED PORTAL PINs9/30/2019: 30,282Oct 2019 + 559 Total Confirmed: 30,841


Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19

Num

ber o

f Cal

ls

INCOMING CALLS SERVED THROUGH TRS MAIN NUMBER

Total Incoming Answered Routed Abandoned

Page 89 of 107

Count Benefit Total

Average

Benefit

Average Years

of Service

Average

Age

Disability 4 $3,444.38 $861.10 14.17 55.25

Normal 96 $153,207.18 $1,595.91 19.06 63.15

Total 100 $156,651.56 $1,566.52 18.86 62.83

162 ($204,544.47) $1,262.62 22.66 81.46

Monthly Retirement Status Report

From 11/1/2019 to 11/30/2019

New Retirements

Terminated Annuities

Page 1 of 1

Page 90 of 107

CLIENT SERVICES PERFORMANCE METRICS THROUGH NOVEMBER 2019

0

200

400

600

800

1000

1200

1400

1600

Num

ber o

f Req

uest

sESTIMATE REQUESTS THROUGH NOVEMBER 2019

New Requests Completed Outstanding Avg. time to complete = 23.74 hrs

86%

13%

1%

INFORMATION CENTER PERFORMANCE NOVEMBER 2019

TOTAL CALLS QUEUED THROUGH THE OTRS

MAIN LINE : 5236


520

PORTAL CLIENTSWITH CONFIRMED PINs:

8109



520

685 Calls Routed Through Menu Options.

4479 Calls Answered. Average Speed of Answer: 13 seconds.Target Speed: 14 Seconds

72 Callers Abandoned in Queue. Average Abandon Time: 13 seconds.

CONFIRMED PORTAL PINs10/31/2019: 30,841November 2019 + 482 Total Confirmed: 31,323


Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19

Num

ber o

f Cal

ls

INCOMING CALLS SERVED THROUGH TRS MAIN NUMBER

Total Incoming Answered Routed Abandoned

Page 91 of 107

Count Benefit Total

Average

Benefit

Average Years

of Service

Average

Age

Disability 5 $5,142.06 $1,028.41 15.16 51.20

Normal 82 $93,330.73 $1,138.18 16.13 62.99

Total 87 $98,472.79 $1,131.87 16.07 62.31

142 ($189,339.94) $1,333.38 23.15 79.84

Monthly Retirement Status Report

From 12/1/2019 to 12/31/2019

New Retirements

Terminated Annuities

Page 1 of 1

Page 92 of 107

HR STATUS REPORT 12/11/2019

HR STATUS REPORT

• New Hires (October & November 2019):

n/a

• Resignations/Terminations/Retirements (October & November 2019):

n/a

• Promotions/Transfers/Salary Adjustments/Changes (October & November 2019):

n/a

MISCELLANEOUS PAYMENTS

• Performance-Based Pay Adjustments

Under OMES/HCM, Merit Rule 260:25-7-27 permits the head of a state agency to award performance-basedpay adjustments to employees who receive an overall rating of “meets standards” or better on theirperformance evaluation (PMP), provided approval is received by the agency's cabinet secretary, and provided

that the payments can be made without the need for additional funding.

TRS received approval to provide for a one-time lump-sum payment of $1,000 for an overall rating of “meetsstandards” and $1,500 for “exceeds standards” for the evaluation period ending 6/30/2019. Only employeeshired prior to 11/1/2018 were eligible.

As a result, 35 employees received the stipend and a total of $44,500 was paid by the agency.

• Severance Payments:

n/a

NEW HIRES, RESIGNATIONS, RETIREMENTS OR OTHER CHANGES PENDING

n/a

Page 93 of 107

Employer ReportingAnalysis of Employee and Employer Contributions Received

0 0

3

6

9

0

2

4

6

8

10

July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June TOTAL

Number of Delinquent Reports FY20

$0

.00

$0

.00

$4

11

,05

1.4

8

$1

13

,63

3.6

7

$5

24

,68

5.1

5

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000


Estimated Delinquent Funds FY20

$5

6,9

58

,73

2.5

5

$4

5,8

55

,98

3.8

8

$5

5,1

79

,30

6.9

8

$6

7,1

84

,00

0.4

2

$2

25

,17

8,0

23

.83

$7

3,5

02

,63

6.7

1

$4

4,3

53

,79

4.2

1

$5

8,2

42

,60

9.5

3

$7

2,4

20

,86

8.6

3

$2

48

,51

9,9

09

.08

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000


Comparison of Contributions ReceivedFor Four Months Ended November 30, 2018 and November 30, 2019

2019 2020

Page 94 of 107

CURRENT ASSETS:

Cash Not Available For Investment $23,287,825.74

Equities (At Market Value) 12,794,587,815.54

Fixed Income (At Market Value) 3,887,835,132.73

Short-Term Investment Account 788,974,093.68

Due From/(To) Broker (294,950,323.80)

Accounts Receivable Installment Payments 1,065,676.61

Accrued Income 60,372,393.39

Total Current Assets 17,261,172,613.89

CAPITAL ASSETS:

Office Furniture and Equipment 5,265,742.65

Accumulated Depreciation (846,219.00)

TOTAL ASSETS $17,265,592,137.54

CURRENT LIABILITIES:

Teachers' Savings Fund $5,571,825,666.64

Retirement Benefit Fund 11,331,483,796.48

Interest Fund 281,984,848.09

Expense Fund 19,162,069.83

Suspense Fund 55,679,720.53

Total Current Liabilities 17,260,136,101.57

TRS Capital Investment 5,456,035.97

TOTAL LIABILITIES AND CAPITAL INVESTMENT $17,265,592,137.54

BALANCE SHEET

OCTOBER 31, 2019

Page 95 of 107

Year to Date Year to Date % Change

(FY 2020) (FY 2019)

Balance of Cash and Investments

Net Position, Beginning of Year $17,105,220,217.46 $16,584,571,799.91

RECEIPTS:

Members' Deposits 92,071,451.95 83,047,263.60 10.87%

Employer Contributions 138,715,960.16 127,059,770.24 9.17%

State Credits 8,798,857.27 7,057,254.46 24.68%

Reimbursed Administrative 2,093.00 3,605.09 -41.94%

Matching Funds from Schools 8,933,639.70 8,013,735.53 11.48%

Lottery Revenue 1,973,976.99 1,809,014.00 9.12%

Cigarette Sales Tax Revenue 492,731.42 413,951.37 19.03%

Dedicated Revenue 116,714,318.71 113,387,078.15 2.93%

Total Retirement Receipts 367,703,029.20 340,791,672.44 7.90%

Interest Income (Fixed Income and Short-Term) 63,986,044.18 64,264,639.02 -0.43%

Dividend Income 53,975,387.59 55,085,346.35 -2.01%

Master Limited Partnerships 9,250,042.05 13,772,664.42 -32.84%

Net Realized Gain/(Loss) 236,511,204.71 187,813,377.01 25.93%

Net Unrealized Gain/(Loss) (73,390,414.76) (776,019,826.77) -90.54%

Investment Operations Income:

Class Action Lawsuit Proceeds 35.19 129,602.67 -99.97%

Other Income 931.83 90,768.04 -98.97%

Securities Lending Income 2,166,805.00 2,329,661.00 -6.99%

Total Investment Income 292,500,035.79 (452,533,768.26) -164.64%

TOTAL RECEIPTS 660,203,064.99 (111,742,095.82) -642.66%

DISBURSEMENTS:

Retirement Benefits 456,434,927.10 465,165,232.68 -1.88%

Insurance Premiums Paid for Retirees 12,177,666.27 12,348,947.94 -1.39%

Death Benefits 8,074,185.69 7,396,740.71 9.16%

Withdrawals of Accounts 14,876,745.76 16,762,924.96 -11.25%

Total Benefit Payments 491,563,524.82 501,673,846.29 -2.02%

Administrative Expense:

General Operations 1,723,947.37 1,841,983.71 -6.41%

Investment Expense 10,963,196.37 12,229,088.42 -10.35%

Total Administrative Expenses 12,687,143.74 14,071,072.13 -9.84%

TOTAL DISBURSEMENTS 504,250,668.56 515,744,918.42 -2.23%

NET INCREASE/(NET DECREASE) 155,952,396.43 (627,487,014.24) -124.85%

Balance of Cash and Investments, October 31 $17,261,172,613.89 $15,957,084,785.67

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

FOR THE FOUR MONTHS ENDED OCTOBER 31

Page 96 of 107

FY-2019 YTD FY-2020 YTD

Actual Actual Increase Increase

Expenditures Expenditures (Decrease) (Decrease)

Object of Expenditure 11/30/2018 11/30/2019 Amount Percentage

Personnel Services

Salary and Longevity Pay Expenses 1,046,484 1,090,765 44,281 4.2%

Taxes, Benefits, and Other Expenses 498,293 520,062 21,769 4.4%

Subtotal Personnel Services 1,544,777 1,610,827 66,050 4.3%

Professional Services

Investment Consultant Expenses 375,559 290,119 (85,440) -22.8%

Investment Manager Alternatives Expense 0 50,000 50,000 0.0%

Investment Custodian Expenses 7,000 0 (7,000) 0.0%

Pension Commission Expenses 12,856 0 (12,856) 0.0%

Subtotal Investment Expenses 395,415 340,119 (55,296) -14.0%

Legal Services - Special Projects 19,460 8,609 (10,851) -55.8%

Legal Services - Attorney General 0 0 0 0.0%

Administrative Hearings 0 0 0 0.0%

Auditing Services 122,377 31,319 (91,058) -74.4%

Actuarial Services 18,340 17,150 (1,190) -6.5%

Medical Hearings 3,300 3,300 0 0.0%

Communications Firm 0 0 0 0.0%

Contract Lobbyist 15,000 0 (15,000) 0.0%

Disability Retirement Management 0 0 0 0.0%

Miscellaneous Services 16,217 23,522 7,305 45.0%

Subtotal Professional Services 194,694 83,900 (110,794) -56.9%

Total Professional Services 590,109 424,019 (166,090) -28.1%

Travel and Per Diem Expenses

Non-Employee Travel Expenses 6,633 5,678 (955) -14.4%

Employee Training 8,302 7,263 (1,039) -12.5%

Employee Travel Expenses 13,353 10,242 (3,111) -23.3%

Subtotal Travel and Per Diem Expenses 28,288 23,183 (5,105) -18.0%

Administrative Expenses

Postage 81,439 85,741 4,302 5.3%

Printing and Binding Contracts 11,950 0 (11,950) 0.0%

Informational Services 5,558 8,725 3,167 57.0%

Rent and Maintenance 67,625 61,534 (6,091) -9.0%

Office Supplies 7,137 6,497 (640) -9.0%

Equipment 0 0 0 0.0%

Office Relocation 0 0 0 0.0%

Miscellaneous Administrative Expenses 4,629 5,167 538 11.6%

Subtotal Administrative Expenses 178,338 167,664 (10,674) -6.0%

Data Processing Expenses

Professional Services 203,755 150,669 (53,086) -26.1%

Telecommunication Services 1,885 1,977 92 4.9%

Rent and Maintenance 1,098 2,979 1,881 171.3%

Office Supplies 0 0 0 0.0%

Equipment - Telecommunications 12,183 19,713 7,530 61.8%

Informational Services 0 0 0 0.0%

Subtotal Data Processing Expenses 218,921 175,338 (43,583) -19.9%

Total Expenses 2,560,433 2,401,031 (159,402) -6.2%

Total Investment Expenses Only 395,415 340,119 (55,296) -14.0%

Total Data Processing Expenses Only 218,921 175,338 (43,583) -19.9%

Total except Investment & Data Processing Expenses 1,946,097 1,885,574 (60,523) -3.1%

Wednesday, December 11, 2019

SCHEDULE I

Comparison of Actual Expenditures Fiscal Year 2019 and Fiscal Year 2020

5 Months Ended November 30, 2019

Page 97 of 107

5 Months 5 Months Over Over

FY-2020 YTD FY-2020 YTD (Under) (Under)

Object of Expenditure Budget Actual Amount Percentage

Personnel Services

Salary and Longevity Pay Expenses 1,168,205 1,090,765 (77,440) -6.6%

Taxes, Benefits, and Other Expenses 592,459 520,062 (72,397) -12.2%

Subtotal Personnel Services 1,760,664 1,610,827 (149,837) -8.5%

Professional Services

Investment Consultant Expenses 493,530 483,532 (9,998) -2.0%

Investment Manager Alternatives Expense 208,335 50,000 (158,335) -76.0%

Investment Custodian Expenses 14,000 0 (14,000) 0.0%

Pension Commission Expenses 17,500 0 (17,500) 0.0%

Subtotal Investment Expenses 733,365 533,532 (199,833) -27.2%

Legal Services - Special Projects 41,669 8,609 (33,060) -79.3%

Legal Services - Attorney General 3,125 0 (3,125) 0.0%

Administrative Hearings 2,500 0 (2,500) 0.0%

Auditing Services 207,454 31,319 (176,135) -84.9%

Actuarial Services 49,000 28,583 (20,417) -41.7%

Medical Hearings 6,250 3,300 (2,950) -47.2%

Communications Firm 20,835 0 (20,835) 0.0%

Contract Lobbyist 18,750 0 (18,750) 0.0%

Disability Retirement Management 20,835 0 (20,835) 0.0%

Miscellaneous Services 10,820 23,522 12,702 117.4%

Subtotal Professional Services 381,238 95,333 (285,905) -75.0%

Total Professional Services 1,114,603 628,865 (485,738) -43.6%

Travel and Per Diem Expenses

Non-Employee Travel Expenses 23,300 5,678 (17,622) -75.6%

Employee Training 14,729 7,263 (7,466) -50.7%

Employee Travel Expenses 18,304 10,242 (8,062) -44.0%

Subtotal Travel and Per Diem Expenses 56,333 23,183 (33,150) -58.8%

Administrative Expenses

Postage 81,600 85,741 4,141 5.1%

Printing and Binding Contracts 34,958 0 (34,958) 0.0%

Informational Services 2,991 8,725 5,734 191.7%


Office Supplies 12,826 6,497 (6,329) -49.3%

Equipment 7,000 0 (7,000) 0.0%

Office Relocation 100,000 0 (100,000) 0.0%

Miscellaneous Administrative Expenses 30,010 5,167 (24,843) -82.8%

Subtotal Administrative Expenses 339,675 167,664 (172,011) -50.6%

Data Processing Expenses

Professional Services 439,173 150,669 (288,504) -65.7%

Telecommunication Services 12,778 1,977 (10,801) -84.5%


Office Supplies 1,040 0 (1,040) 0.0%

Equipment - Telecommunications 20,625 19,713 (912) -4.4%

Informational Services 1,860 0 (1,860) 0.0%

Subtotal Data Processing Expenses 487,976 175,338 (310,778) -63.7%

Total Expenses 3,759,251 2,605,877 (1,151,514) -30.6%

Total Investment Expenses Only 733,365 533,532 (199,833) -27.2%

Total Data Processing Expenses Only 487,976 175,338 (310,778) -63.7%

Total except Investment and Data Processing Expenses 2,537,910 1,897,007 (640,903) -25.3%

Wednesday, December 11, 2019

SCHEDULE II

Comparison of FY2020 Budget to Actual Expenses

5 Months Ended November 30, 2019 Year to Date Comparison

Page 98 of 107

Expenses of Board

Trustee Board Retreat, OPFTEC 498.40$

Trustee Board Retreat, OPFTEC 338.75

Trustee Board Retreat 161.50




Trustee Board Retreat, Sept. Investment & Regular Board Meetings 244.00

Trustee Board Retreat 130.25


2,523.60

Travel of Employees

Application Developer Specialist Board Retreat 171.90

Chief Financial Officer OPFTEC 210.75

Chief Investment Officer Board Retreat, OPFTEC, NASIO Conference 515.65

Deputy Executive Director of Operations Board Retreat, OPFTEC 331.10

Director of Client Services Board Retreat, OPFTEC 330.45

Executive Assistant Board Retreat 144.50

Executive Director Board Retreat, OPFTEC 358.30

General Counsel Board Retreat, OPFTEC 334.45

Senior Investment Officer Board Retreat 30.50

2,427.60

Communications

AT&T Wireless, OneNet phone service charges 316.06

Bancfirst Remote deposit scanner service charges 18.32

Cox Communications Cable charges - September 49.58

Gatehouse Media Oklahoma Holdings Job ad placement (2) - Oklahoman 2,019.70

JP Morgan Chase Bank, NA Account analysis bank fees 696.50

Office of Management and Enterprise Services Server, disk storage, scanning & network support - September 15,657.55

18,757.71

Contingency, Maintenance, Insurance, Rent, Etc.

Amazon Marketplace Office supplies 23.72

Director of Client Services Reimbursements for refreshments for seminars 133.06

City Bites Refreshments - September Board meetings 9.18

CYMA Systems, Inc. Software maintenance and licensing 695.00

Department of Libraries Records storage: August 478.50

GMEI Utility LEI for Bond managers 91.00

Hyatt Regency Tulsa OPFTEC lodging: trustees and TRS staff 2,286.00

Imagenet Consulting LLC Desktop printer maintenance and usage: August - September 886.92

National Student Clearinghouse Degree verification service for job applicant 24.95

Oklahoma Press Service Open meeting and open records books 50.00

Office of Management and Enterprise Services Office rent - October 13,195.27

Panera Bread Catering - September Board Meeting 287.97

Oklahoma Assoc. of Procurement Professionals OKAPP meeting registration: Assistant CFO, Sr. Financial Acct. 36.00

Oklahoma State Bureau of Investigations Background checks 20.00

Society for Human Resource Management Membership - H.R. Director 189.00

Standley Systems, LLC Copier Leases - July - September 4,574.13

Staples Office supplies/paper 1,457.35

Timothy J. Rollins - Security Software Solutions Death verification service: 9/16/19 - 6/30/2020 6,667.00

Versus Advisory, Inc. OPFTEC - 1 registrant 250.00

Walmart Refreshments for trustee meetings 16.34

31,371.39

CLAIMS FOR AUTHORIZED EXPENDITURES

OCTOBER 31, 2019

Page 99 of 107

Professional Services, Workers Comp Insurance

Dathan D. Jay, MD Medical Board - October 300.00$

Gabriel, Roeder, Smith, & Co. Actuarial services - September 5,716.67

MY Consulting Inc. ALICE/Client server development - September 28,156.50

Office of Management and Enterprise Services Interagency mail/postage/printing 8,235.48

Peyton Osborne, MD Medical Board - October 300.00

Phillips Murrah, PC Services rendered - Invesco Strategic Opp., Golden Driller 4,250.00

State Treasurer Unclaimed property svcs. - 7/1/2019 - 9/30/2019 750.00

Stinnett & Associates LLC Internal Audit services: September 2019 8,021.25

55,729.90

Investment Expenditures

Andco Investment Consulting Svcs. - September 96,706.34

Meketa Investment Group Private market admin. svcs. 25,000.00

121,706.34

Salaries and Fringe Benefits

Salaries Administrative department 43,430.34

Salaries Finance/Accounting department 36,934.73

Salaries Client Services department 95,645.72

Salaries Investment department 21,853.08

Salaries IT department 6,873.75

Longevity Payroll 3,700.00

Excess Benefit Allowance 1,976.24

FICA/MQFE Social Security and Medicare 14,972.51

Oklahoma State Deferred Savings Incentive Plan Savings incentive plan and administrative fee 966.96

Oklahoma Group Insurance Employee health, dental, and life 40,977.64

Teachers' Retirement System of Oklahoma Employees' retirement contributions 44,739.59

312,070.56

Grand Total 544,587.10$

OCTOBER 31, 2019


Page 100 of 107

Expenses of Board

Trustee Board Retreat 127.75$

127.75

Travel of Employees

Assistant Chief Financial Officer Public Pension Financial Forum (P2F2) Conf. - Salt Lake City, UT 774.80

Business Analyst OCSBM Presentation Stillwater, OK 61.60

Chief Financial Officer Public Pension Financial Forum (P2F2) Conf. - Salt Lake City, UT 750.00

Client Services Manager Retirement Seminar 27.40

1,613.80

Communications

AT&T Wireless, OneNet phone service charges 56.01

Cox Communications Cable charges - October 49.58

JP Morgan Chase Bank, NA Account analysis bank fees 696.37

Office of Management and Enterprise Services Server, disk storage, scanning & network support - October 15,690.21

Thomson West Legal information services subscription 574.48

17,066.65

Contingency, Maintenance, Insurance, Rent, Etc.

Amazon Marketplace Office supplies 79.96

Dell Marketing, LP Mobile workstations 3,945.02

Department of Libraries Records storage: September 478.50

Doubletree By Hilton At Warren Place, Tulsa, OK Board Retreat lodging and meals 7,205.86

Executive Director Reimbursement for Board Retreat expenses 1,198.23

Hyatt Regency Tulsa OPFTEC lodging: trustees and TRS staff - credit for taxes charged (324.00)

Kiamichi Opportunities Kitchen/office meeting supplies 199.00

Little America Hotel Public Pension Financial Forum - P2F2, CFO, Assistant CFO 2,265.00

Newview Oklahoma Office supplies 271.13

Precision Roller Replacement parts for voucher scanner 160.06

Staples Office supplies/paper 1,622.64

United States Postal Service Deposit into bulk mailing account 75,000.00

Walker Companies Office supplies, notaries, stamps 75.00

92,176.40


NOVEMBER 30, 2019

Page 101 of 107

Professional Services, Workers Comp Insurance

ICE Miller Legal fees - September 505.75$

J. P. Livingston, MD Medical Board - November 300.00

Office of Management and Enterprise Services Interagency mail/postage/printing 339.30

Peyton Osborne, MD Medical Board - November 300.00

The Meadows Document destruction 224.10

1,669.15

Salaries and Fringe Benefits

Salaries Administrative department 49,430.34

Salaries Finance/Accounting department 44,938.98

Salaries Client Services department 119,121.80

Salaries Investment department 24,853.08

Salaries IT department 7,873.75

Longevity Payroll 3,676.00

Excess Benefit Allowance 1,976.24

FICA/MQFE Social Security and Medicare 17,747.57

Oklahoma State Deferred Savings Incentive Plan Savings incentive plan and administrative fee 966.96

Oklahoma Group Insurance Employee health, dental, and life 40,977.64

Teachers' Retirement System of Oklahoma Employees' retirement contributions 52,094.09

363,656.45

Grand Total 476,310.20$

NOVEMBER 30, 2019


Page 102 of 107

Deputy Executive Director of Operations Report

December 2019 Board Meeting

1. There was a statewide network outage on 11/15/2019 starting just before 9:00 AM. We were

able to take some calls throughout the morning and early afternoon and assist some members

dropping off documents. Eventually there was a complete outage and we set the voice system

to notify callers we could not answer calls around 2:00 PM. The agency was closed at 3:30. Voice

messages were left in some cases and were responded to on Monday. Call volume on Monday

was at the average for Mondays.

2. Workflow activity was steady at 2,738, in line with the monthly average of 2,792 for 2019. The

top 5 as of 11/28/2019 for the calendar year are Estimate Requests (6536), Address Changes

(3383), Withdrawal Requests (2903), Tax Withholding Changes (2709) and Applications to Retire

(2511).

3. We continue to work with My Consulting Group and OMES on the cybersecurity audit

recommendations. Some of the projects are completed and some are long-term with target

completion dates in the future as far as June 2020.

4. The Member Portal had almost 7,000 Members for November and over 9,000 in October. The

main web site also had a decrease in activity, approximately 30,000 pages viewed for October vs

24,000 for November. We continue to look for improvements for self-service using the analytics

reports and member communications.

5. Progress is being made with the upgrade project of the 8 servers for the Pension Administration

System. OMES is working on the configuration but no live date has been set yet.

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1 | P a g e

GENERAL COUNSEL REPORT DECEMBER 2019 SARAH GREEN

1. Securities Litigation

a. Action in Motion to Dismiss phase. Briefing cycle completed 11.8.19.

b. Awaiting scheduling of oral arguments.

c. Anticipated ruling on the Motion to Dismiss expected by Feb 2020.

2. White Star Bankruptcy

a. TRS (as landlord) has asserted a claim of approximately $168,955 in prepetition

debt owed by White Star.

b. White Star filed to reject our lease in its entirety as of 11.30.19. We may object to

that date as Whitestar failed to fully vacate the premises by that date.

3. Harvey Parkway Building

a. Contango – Purchased Whitestar’s assets and would like to lease the entire 3rd

floor as of 12.1.19. We are in lease negotiations currently.

b. In addition to Contango potentially occupying space on the 3rd floor, we have a

party interested in 8,553 sq. ft. of space on the 2nd floor to begin 1.1.20. We are in

lease negotiations with that company as well.

c. Arcadia Capital – currently occupying 9,075 sq. ft. of space on the 4th floor – would

now like to move to the 6th floor and occupy 12,044 sq. ft. of space as of 2.1.20.

We are currently in lease negotiations.

d. TRS intends to renovate and occupy the 5th floor as headquarters as of 7.1.20. We

also want to convert some space on the 1st floor to a conference room for both

TRS and tenant use.

4. Golden Driller

a. Following the closing of Palm Beach Gardens, we entered into discussions with

L&B regarding amendments to the current fee structure, Investment Manager

Agreement, and Golden Driller Partnership Agreement.

5. Permanent Rulemaking

a. In Public Comment Period – from 12.3.19 – 1.2.20 with a Public Hearing to be held

1.6.20 at 9am at TRS. To date, we have not received any public comments.

Page 104 of 107

M E M O R A N D U M

TO: The Board of Trustees of TRS

FROM: Tom Spencer, Executive Director

DATE: December 10, 2019

RE: Monthly Report for October 23, 2019 through December 9, 2019 -------------------------------------------------------------------------------------------------------------------- Here are a few of the highlights of my activities since my last report at the October Board meeting.

1. Board Retreat – I hope that the board members who attended the retreat felt like it was agood series of discussions. Retreats are good ways to discuss the important issues and goals ofthe agency, but it’s also a great way to get to know one another in a more casual atmosphere. Thestaff thought we had good discussions and we’ve certainly identified projects and other thingsthat we need to move on.

2. Information Technology (replacement pension software) – The week after the retreat, JohnSantos, John Reasor (TRS I.T. staffer), and I attended a demo of some commercially availablepension administration software. The demo was at the OPERS’ office building as they areconsidering replacing their software too. The software is in use at both the Firefighters PensionSystem and the Oklahoma Law Enforcement system. We wanted to see if there was somesoftware that was as close to “off the shelf” as possible. The consensus here is that it might workbut we want to do an RFP that will go out to any software company that has specific experienceproviding software to pension plans.

3. Budget Review – John Santos, Sam Moore and I had a meeting with Secretary of BudgetMike Mazzei, Secretary of Digital Transformation David Ostrowe and two OMES budgetstaffers a few weeks ago. He asked TRS and several other “non-appropriated” agencies for moredetailed data and information on our budget but also wanted us to provide some benchmark andother data to document how well we are doing. A few of the items we intend to highlight areTRS’ very low administrative costs compared to our peers. TRS, OPERS and the Police PensionSystem were the statewide plans in the natio with the highest percentage improvement in fundedratio between FY 2010 and FY 2018. Finally TRS long-term returns are quite good. Our 10 yearannualized return was 10.67%, 7 year was 9.64%, and the 3 year was 9.83%. The TRS ten yearreturn was in the 1st percentile nationally. We will provide these and some other metrics to showwhere TRS is doing well versus its peer funds.

4. Legislation – I and the other 4 state executive directors of pension systems presented reportsto the House Banking, Financial Services and Pension Committee on November 15. It was ahearing on an interim study on COLAs requested by Rep. Avery Frix. Collectively the statesystems have a very good story to tell as the funded ratios of all 6 have improved greatly in thelast decade. The public safety plans said they could afford COLAs. TRS and OPERS provided

Page 105 of 107

2

the cost of a 2% and 4% COLA but did not agree that either could “afford” COLAs. I also gave a presentation and defense of the Oklahoma Pension Legislation Actuarial Analysis Act. 5. Audit. a.Internal Audit (AP & P-card report) The staff was very pleased that Stinnett essentially found nothing to report other than one suggestion of a “best practice.” We were disappointed that after getting new responses from OMES related to the Cyber Security audit, that they weren’t definite enough on a few so that Stinnett could close out the report. I participated in a conference call with the Audit Committee. b. External Audit (RFP) – TRS staff worked with the State Auditor and Inspector to put together an RFP for audit services. It was actually released by the SA&I office but proposals will be reviewed by both offices and we will reach a consensus on which firm to recommend for selection of the Board. 6. Investments (Office Building) a. White Star Petroleum – The bankruptcy is almost over. White Star decided to “reject” our lease effective 12/1/2019. If granted they will cease paying any rent. We thought they were going to abandon all of their furniture and minor pieces of personal property. That is not the case now. We are working with Contango (the purchaser of White Star’s assets) and another firm on new leases. b. Arcadia Capital – We are working on a lease with them for the 6th floor. They are expanding their space to about 80% of that floor. They “may” consider taking the rest of the floor after a year but no contractual commitment yet. 7. Communications a. PAFR & Newsletter – We have completed work on the Popular Annual Financial Report (PAFR) for FY 2019 as well as the winter newsletter. An electronic version of the PAFR will be available to our members very soon and we will mail a newsletter with the PAFR as an insert in early January 2020. b. Communications firms – We interviewed 4 finalists for a contract that will assist TRS in improving its communications at all levels. They will help us improve our website, publications, social media posting, and online educational material. Staff will be selecting a firm very soon. 8. Human Resources – We still miss Kim a lot. We held our 3rd quarter Employee Appreciation luncheon several weeks ago. 9. Governor Stitt & new administration a. Leadership Summit – Governor Stitt has scheduled a Leadership Summit in January to talk about how his first year has gone and what agencies have accomplished. b. Digital Government Summit – This is an annual event that I attended with John Santos. It was interesting to see what other agencies are working on. The theme was providing citizens with more data as easily accessible as possible, and that the State’s data should be more accessible and not in “silos.”

Page 106 of 107

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