March 31, 2026 · Nebraska Retirement Systems · 4,465 words · 2 speakers · 11 segments
Good afternoon and welcome to the Nebraska retirement systems Committee.
My name is Senator bob ballard, and I represent the 21st district in northwest lincoln, northern lancaster county. And I serve as chair of the Committee. We'll start off by having members of the Committee introduce themselves, starting on my far left with Senator juarez. Good afternoon everyone. Welcome. Senator juarez from omaha, district five. Senator tony sorrentino, legislative district 39, elkhorn and waterloo. Trevor fitzgerald, Committee legal counsel. Rob clements from elmwood district two, cass county and eastern lancaster. Also assisting our Committee is Committee clerk connie thomas and our Committee page, sam johnson from southern california studying political science at the university of Nebraska, lincoln. This afternoon we'll be hearing one appointment and two reports will be taken. The order listed outside the room. On the table near the entrance, you will find green testifier sheets. If you're planning to testify today, please fill out and hand it to the page when you come up. This will help keep an accurate record of the hearing. Please note that if you wish to have your position listed on the Committee statement for a particular bill, you must testify in that position during the bill's hearing. If you do not wish to testify, but would like a record of your position on the bill, please fill out and please fill out the yellow sheet near the entrance. Also, I would note the legislation policy that all letters for the record must be received via an online comment portal by the by Committee by 8 a.m. The day of the hearing. Any handouts submitted by testifiers will also be included as part of the record as exhibits. We ask that if you have any handouts that you please bring 12 copies and give them to the page. If you need additional copies, the page can help you make more. Testimony will begin with the introducers opening statement. After the statement, we hear from supporters of the bill and those in opposition, followed by those speaking in a neutral capacity. We ask that you bring your testimony and give it. We ask that you bring your testimony by giving us your first and last name. And please spell it for the record, because this Committee meets over the noon hour and we have floor debate beginning at 1 p.m. We will have a three minute light system. When you begin your testimony, the light will turn green. Yellow light will mark your one minute warning. When the red light comes on, we'll ask you again. Your final thoughts. Remind everyone, including senators, please turn off or silence your cell phones. We'll begin today's hearing with our appointment of thomas dodge dodge dodge. Perfect for the public employees retirement board. Good afternoon. Good afternoon senators. Whenever you're ready. Oh, okay. Sorry. No. You're okay. I appreciate your time allowing me to be here to speak before you. I just want to give you kind of a brief overview of my history.
I'm currently a member of the leadership team at sarpy county. I've been there for approximately three years now. I oversee a few departments, mainly the 911 center community corrections, and our veterans service office. I am active in the emperor's retirement plan, as well as some of your other plans that they have there at the county. Prior to that, I was with the bellevue police department for 27 years, working my way up through the ranks. I retired as assistant chief there, as are also being interim chief, retired under their defined benefit plan, their drop program that they have there. So I'm familiar with that. And during my time with the police department, as I as I started, I was a member of the bellevue police officers association, where I was the vice president for about 12 years. And then once I obtained the rank of lieutenant, I became the president, vice president about another 14 years of the bellevue police officers association command staff. During that entire time, I worked on retirement issues, contract negotiations, etc. You know, is when I started with the police department, you know, I kind of had a thousand, you know, feet view of everything. And then once I, I rose up through the ranks, you, you know, had to look everything at the 30,000 foot view of everything. And so, you know, during that time there, I began to appreciate, you know, the things that taking care of the membership and really focusing on, you know, the individual. I did some time in the united states army prior to that, where I really learned the lesson of taking care of your people. And during that whole time, I really tried to look at everything from an ethical and moral compass, the servant leadership, all those types of things, which I think will transfer well to this board as one of the things that we really want to do is focus. Personal focus for me is that whenever somebody, a member of that plan goes to retire and leave, that they have their their monowi that there is a good fiduciary responsibility by me and they're able to have that money for when they need it to go into retirement. Okay. Thank you so much. I'll see if there's any questions from the Committee. Seeing none, we let you off easy. Thank you so much, I appreciate it. I appreciate your time, Senator. Thank you so much. All right. Any supporters of this appointment, anyone in opposition, anyone in a neutral capacity? See? None. We had no online testimony, no online comments or ada comments for this appointment. That will end our hearing on the appointment. And we'll begin our presentation of the Nebraska investment council's annual report. Allen heng. Welcome. Good afternoon, Committee chair. Members of the retirement Committee. My name is ellen heng, spelled e l l e n h u n g. I am the state investment officer.
I'm pleased to present the 2025 annual report for the Nebraska investment council. I'm just going to go over a few highlights in our report, as I have really good news to tell. As you can see on page two, our council consists of five appointed members. Nebraska statute requires our appointed council members to have at least seven years of experience in the field of investment management or analysis, or at least 12 years of experience in financial management. Our current appointed members have much more than these minimum qualifications and are all financial experts. We also have two ex-officio members, the state treasurer and the director of emperors. There are nine members of the investment staff, including myself, and that number has not changed since at least the last ten years. Our closing balance across 32 investment programs as of december 31st, 2025, is $45.5 billion. That is an increase from 42.7 billion at the end of 2024. The pie chart on page six shows assets under management by our major programs. As you can see, the largest is the defined benefit plans totaling 45.4% of all the assets. Page eight lists out some of the accomplishments and changes we made in 2025. Just a few highlights. We completed an asset liability study and adopted new target asset allocations that balance future liabilities and expected growth of assets. As the retirement plans for the schools and judges and cash balance plans are 100% funded. The target allocation to public equities and return seeking fixed income were reduced and called core bonds increased and effectively taking some risk off the table. The target asset allocation for retirement plans for patrol and ulcers stayed the same. We also added infrastructure to all the plans as part of the real assets portfolio. We also completed the search for investment consultants to allow for the selection of best in class consultants. The council chose to stay with am for general consultant and hire xia as the private markets consultant, page ten through 13. Include information on our defined benefit plans, which total 26 point billion dollars, and on the bottom of page 11, it shows that defined benefit plans for school and judges had a return of 15.6% for 2025, which is slightly below its benchmark. But it's still we still perform in the top quartile compared to our peers. With the change in asset allocation, we expect the retirement plans for schools and judges to start being slightly different from the patrol plan. This is seen on top of page 13, with the performance shown as 15.8%. The omaha retirement system is listed on page 14. It had a return of 15.6% for 2025. The council. As a reminder, the council inherited the plan in 2017 and after eight years of changes to the fund, the performance is now more in line with other defined benefit plans for the shorter term.
We expect this trend to continue as we have been able to resolve most of the problem assets that we had inherited. The other state and county retirement plans that are not defined. Benefit plans are shown on pages 15 through 18. As a reminder, the state cash cash balance plan essentially mirrors the defined benefit plan on to the operating investment pool, which starts on page 19. There were a lot of outflows in 2025. The oip went from $9.2 billion at the end of 2024 to $7.9 billion at the end of 2025. This was from outflows and not because we lost any money. The asset allocation and investment guidelines are determined by the council, and the assets are internally managed by the staff. The oip earned 6.5% in 2025. Information on the general endowment starts on page 22. The largest endowment in the general endowment is the permanent school fund at $1.2 billion. Page 24 shows the performance of the general endowment. And for 2025 it had a return of 11.8%. It did. Underperformance benchmark because general endowment has a value so it can generate more current income for the endowments. Since its inception in 1996, the general endowment had a return of 7.1%. I know there continues to be confusion about our return for the permanent school fund, so I'm confirming that our total return since inception was 7.1%. This and all our return numbers are calculated by northern trust, our custodians. It is also recalculated and confirmed by our general consultant, aon, so we don't make those numbers up. There are two different parties that calculate our returns. The healthcare endowment is on page 25, and it's a small endowment that holds tobacco sediment assets. Page 28 and 29 shows the Nebraska education savings plan, with page 30 showing the Nebraska enable savings plan. The last two pages of the report lists out items of interest since the inception of the council in 1969, we successfully completed some significant projects in the last couple of years. Going forward, we will be fine tuning our portfolios to take advantage of areas where we can increase returns on the margin while keeping risk and fees low. I will continue to focus on staff development and retention and tools that we can use to increase productivity and to end. As in years past, we will be having our annual educational retreat and it's scheduled for october 15th, 2026, and you're all invited to attend. That concludes my remarks. Thank you, miss hahn. Are there any questions? Sen hardin. From your. Perspective, what was really good with this and what was not in terms of performance? What happened this week? What was your highs and lows? So I always say that we don't take credit when we do well, and we don't really take credit when we do bad. We can only give you what the market gives us.
So given what the market gave us last year, we did exceptionally well because we outperform our peers with less risk and less fees. So all our numbers are after fees. So that's why we also look really well. So what we did well, we did what we are, what we say we're going to do. We kept on knitting and we took advantage of the market highs and and achieved a 15.8%. What do you wish would have gone differently? I don't know if we would have done anything differently. And as I mentioned towards the end of my remarks, the last two years since I've been here, I've been here a little over two years now. We did a lot of revamping, as in bringing new consultant. We redid our asset allocation, and at this point, I feel our portfolio is in the best shape it's in considering all our liabilities and what we have to work with. And I think going forward, it will just be looking at just improving on the margins. So for example, we looked at our fixed income. We have a passive mandate and our fixed income, which at this point doesn't really make sense. So we're looking at presenting to the council an active strategy, which we will be doing in april. So that kind of stuff that we're just kind of fine tuning, making sure we have the right managers in place and making sure that the mandates don't mix still makes sense for all our different strategies. Thanks. Additional questions. I have one. So as you look at the global and domestic, there's some stock market uncertainty in the future. What do you see on the horizon? And then also will that kind of dovetail? Will that impact your asset allocation where you foresee any asset allocation shifts? No. So we don't look at short term happenings in the markets to determine what we do. So everything our asset allocation is based on long term views and what we expect the markets to do in the long term. And what's probably keeping me up at night these days are private markets and how private credit is affecting private markets and the markets in general. And we are very lucky. We don't have any exposure to private credits. We decided that last year and our our exposure to private markets is actually a lot less than most funds. So that's why I say that we do keep our risks to a minimum. And that's why. We don't expect as big an impact as the private markets have not been doing as well in the last couple of years. Thank you. Senator clements. Thank you, mr. Chairman. Thank you, miss hong. The osers plan investment returns. In the past, you've talked about some of the investments. Having to wait until they are able to be invested at a better rate. How is that going?
So that's why I mentioned that osha's return for 2025 came in at 20 or 15.6%. Is that. On page 1414? Just a minute, please. So on page 14, the bottom chart shows the returns for the one year, three year, five year and ten year. So as you can see, the one year return was 15.6%. And the longer term there they underperformed the benchmark. They came in at 7.7%. But over time, in the last eight years, we've been moving them closer and closer to what our regular portfolios look like. And that's why there are 2025 returns are mirroring ours fairly closely now. The other, the other defined benefit returns. How did they compare to 15.6. 15.8 for. 15.8 and then 15 point. Six the right around the 15.6 7.8. Okay. Well very good. You've very much improved their results. They should help them a lot. Thank you. Thank you, Senator clements any Senator harding. Where are they in terms of funding? I think this last year they were still at sub 60. So that would be in here. Their their funding status will be in the next report given by. In person. Can't wait till you talk about that. I don't work on that part. I just invest the assets. I'm not sure I'm coming to that party. I do have. Senator clements. One more comment. This will be in the next report, but I believe it's because of your performance and page ten of the next report shows investment returns for the defined benefit plans. And since 2019, that took $100 and added the investment returns were subtracted one year and it came out after seven years to $180, which is an 8.82% annual return per year for seven years. So it's looking really good to me. That's on page ten of the report that I thank you for those good results. Thank you, Senator clements, any final. Senator conrad. Thank you, chair. I just want to say thank you for being here, for sharing your time and talents with the Nebraska retirement systems investment council. And I know that you and your office have had to wrangle through a lot of distasteful politics in recent years, but you have dealt with those credibly and effectively and continue to outperform what we ask of you in your job description. And so I just want to say thank you. Thank you, Senator conrad, final questions seeing none. Thank you ellen, I appreciate it. Thank you so much. All right. That will we have no online comments that will end our hearing or end our briefing on the Nebraska investment council. And we'll start our hearing on the Nebraska employees retirement system and mr. Cummings. All right. Good afternoon, chairman ballard. And members of the Nebraska. Retirement systems Committee. My name is tyler cummings.
That's t y l e r c u m m I n g s, and I am the interim director for the Nebraska public employees retirement system's. I want to thank you for the opportunity to present an overview of npr's and our 2026 annual report. As you know, npr's exists to provide retirement security for Nebraska's public employees, and we deliver that mission with integrity, transparency, and strong financial stewardship. We administer seven different retirement plans, which fall under the federal tax code. Over the past year, npr's has continued to demonstrate strong growth and stability. Total membership across all seven plans reached nearly 181,000 members and retirees. Total assets grew approximately to $25.6 billion, and we distributed over $1.4 billion in benefits to our plan members. Importantly, 88% of those benefit payments remain within the braska, contributing to local economies and generating approximately 32 million in state tax revenue. This highlights that npr's is not just a retirement system. It's also an economic economic driver for the state. The financial condition of our plans remains strong overall. As you know, the school employees retirement plan is now 102% funded. The judge's plan exceeds 105% funded. And the state and county cash balance plans are also fully funded. I do want to mention on page 11 for the judges and school plan, it should say that these plans have a surplus and actuarial assets compared to liabilities. We will make any necessary corrections in our digital version of the reports. I do want to turn your attention to page 13 of the report. Here you will find general fund money. The state of Nebraska has contributed to the retirement plans over the past several fiscal years. You'll find that number has decreased recently. I don't necessarily comment on funding policy for our plans, but I do want to highlight some legislative history. After the great recession, the retirement plan saw a decrease in their funded status shortly after this downward trajectory trajectory, stakeholders work together to lower benefits in a measurable way, while also increasing contributions. Those measures are now paying off and have allowed these plans, especially the defined benefit plans to achieve a strong financial position today, allowing for recent policy discussions to exist. On page 16, you will find our annual budgets. The key piece of information I want to highlight is at the bottom of the page. In the footnote, you'll see that last fiscal year, our expenses were approximately three basis points of plan assets, and this fiscal year, our expenses will be approximately four basis points of plan assets. This demonstrates a low cost we achieve in administering retirement benefits for 180 000 plus members. This past year, members made meaningful progress in operations, service and governance. Membership increased by over 5000 accounts. Assets grew by nearly $2 billion. We handled over 53,000 phone calls, 2400 walk ins and 577 scheduled office visits.
We processed over 40,000 pieces of incoming mail and scanned nearly 180,000 documents in our education services team reached more than 2300 members through seminars and webinars. A major focus continues to be the integration of the omaha school employees retirement system. Since the 2024 transition, we have implemented full system functionality, processed over 200 retirements last year, and expanded member outreach. Looking ahead, our priorities include expanding risk assessment efforts, enhancing education and outreach, continuing integration and optimization, improving digital tools and member online access, and maintaining strong fiduciary oversight. In closing, npr's remains committed to providing quality service to our members, expanding outreach and ensuring proper fiduciary oversight. Before I conclude, I would like to share a personal note. As you may already be aware, I will be resigning from my position with emperors effective april 5th. I want to say it's been a privilege to serve in this role and to work alongside this Committee in support of Nebraska's public employees and retirees. However, I won't be going too far as I will be working for the lincoln police and fire pension plan and will probably be in front of this Committee in november. I would also like to extend a sincere thank you to Senator clements for his service on this Committee. His. Some might say his leadership and contributions to this Committee have been un. Be believable. I know he'll be missed as he reaches his term limit. Thank you again for your continued support and oversight, and I would be happy to answer any questions you may have. Thank you. Mr. Cummings. Are there any questions, Senator conrad? Thank you, mr. Cummings, for being here. I was not aware of your planned career transition, but I want to thank you for your service to the state and to the incredible professionalism that you've exhibited in the face of unwarranted political shenanigans. And I guess the good news from my perspective is I think you were treated really unfairly in this process. But the loss for the state of Nebraska will be the gain for the community of lincoln and our first responders. And I think we'll be really excited to have your professionalism and credibility and expertise leading the way on those issues. So thank you for rising above what you had to deal with. Thank you. Thank you sir. All right, Senator hardin. Thanks. I often say this and it's a compliment to you all. With any person that is, I would rather be us than them. And when you look again at the rest of the country, eight states are operating in the black, 42 aren't. And the fact is that of those eight states operating in the black, only two are cells in south dakota joined that list last year. Don't have natural resources. We don't have coal. We don't have oil. We don't have shale. Frankly, the game is easier if you have those things.
So that's to say two states out of 50 don't have those extra goodies. And yet you're still being disciplined and overall doing it very well. So appreciate that. And so thanks so much for your service. I'd rather be us than them. And it's because of how you guys. Thank you. And as I mentioned, this Committee and the entire body have made us have taken measurable policy stances to ensure the stability of the retirement funding to these plans. And so thank you all for that as well. Senator clements. Thank you, mr. Chairman. Thank you for being here. Tyler, thank you for your service. On page 11. Osers plan funding decreased from 59.7 to 5059, 79 5969 burt with a 15.6% return on their investments. Surprised to see a decrease with a rate of return. Can you explain that? That's a that's a great question, Senator clements. If I'm recalling correctly, I believe they still had the one last step down in their assumed rate of return. I believe it either went from seven 2 to 7.0 or 7.1 to 7%. So that was one of the main drivers for a lower funded ratio. Okay. Yeah. That's right. Because the actuaries phased that in gradually. So it's somewhat artificial, but I'm really glad to see that they're phasing that down. And I was, as I mentioned before on the page ten investment returns, they're pretty volatile, but they're impressive when you see over seven years, it's an 8.82% average rate of return. And I see the oscars account balance is 1,650,000,000. And if they have a. It's on page 14. At the bottom, near the bottom and the 2025 amount. If they're assuming 7% return and they're really getting 8.8, that's a 1.8% advantage over the assumption. If you take 1.8% of $1.6 billion, you get $29 million of extra funds because of above assumption rate of return. And so it looks to me like continuing those returns is going to help them turn around. And then finally, the question is, how are we doing with the administration and getting benefits? And all of that operation? Is it finally got merged in? Yes. So everything's been transferred over to us. We've made benefit payments on time every single month. As you know, there have been there were several audits completed prior to the transfer. Most of those audits findings have either been reconciled or we're still in the process of reconciling those audit findings. But overall, I would say the plan, at least from an administrative perspective, is in a much better place than a few years ago. And so we're certainly proud of the work that we've been able to do with oscar's. All right. Thank you. Thank you, mr. Chairman. Thank you, Senator clements, any additional questions? Seeing none, I do just want to echo the Committee statement. We appreciate your seven years of service to this Committee and to the state of Nebraska.
You will be missed. So I really appreciate it. Thank you, thank you. That will end our hearing on the Nebraska public employee retirement