12/4/2017 1:30:46 PM JAC Agency hearings JAC Index 12-4-17pm1 Monday, December 4, 2017 Agenda: PM 002 – Secretary of State 003 – State Auditor 004 – State Treasurer 002 – Secretary of State, Karen Wheeler, Deputy of State, Andrea Byrne, Technology Director, updates to technology, pg. 12, exception requests, technology maintenance $108K, 400 series, $98K, fees due to ETS, $10K transitional money for/if new SoS elected, 320 reduction $63K Burns: reversions? Wheeler: current biennium numbers due Byrne: $108K requested comes from new administrative rule; no maintenance money was included in standard budget Wheeler: pg. 23, 400 series exception request, converting from paper to digital increase in space taken up, no data but digital images for storage, growth projection, increase in telecommunication charges, business filing fees based on assets, fees go directly to GF, how are assets verified? (Sommers) Audits of businesses - dept. of revenue audits help verify business assets. Burns: Growth in digitization, backlog is what portion? Byrnes: growth is huge with substantial increase in applications and use Wheeler: filing fee discussion on increases, efficiency study indicates a reduction in filing fees potentially Pg. 26 coincidental numbers $10K, pg. 28 Unit 0401, Securities enforcement, no exception requests, pg. 33, and Bucking Horse and Rider protection. 003 – State Auditor, Cynthia Cloud, Sandy Urbanek, Deputy State Auditor, Pg. 3, one division – administration, Game and Fish revenue recoupment, exception request for new state auditor, pg. 11, software upgrades, reductions – not recommended for 003 Nicholas: Pg. 17, 29% reduction - $104K Cloud: Correct, 100 series pointed out Nicholas: State retirement system wants to move to Hartford to save money $400K for charges Cloud: confusion in numbers and allocations, fixed cost contract, timing, GF, Feds, special revenue Larsen: request pending? Cloud: discussion about change in process to be had when meeting scheduled 12/4/2017 2:21:04 PM 004 – State treasurer, Mark Gordon and Erica Legerski, Director of Finance, Jeanne Hartmen, and other staff introduced. Legerski: pg 10, exception request priorities discussed, pg. 15 IT equipment request, replacing equipment 4 y/o, one time request to replace as equipment fails, adding equipment for new staff, pg. 16, transition money for new treasurer if elected Sommers: total 900 series Legerski: $1.83M Sommers: cannot find $10K to fund transition? Legerski: small agency limited GF funds, pg. 17, 320 reduction, pg. 24, veterans’ tax exception, pass through money, Nicholas: pg. 19. Questions - wanted update. Gordon: investment funds committee, overview of members Larsen: hired 3 of the 9 qualified applicants, why or are we building? Gordon: CIO of treasurer’s office, retirement system and 3 investment committee selections, get it out of politics, others still interested Legerski: pg. 24, exception to catch up Gordon: background to program, licensing fees for veterans, unpredictable and a year behind, modifications – funding arrangements not necessarily in place Nicholas: who is reviewing program? Richards: Took out number of years a vet could participate, etc. Governor is asking Legislature to review funding. Nicholas: Does this committee want to review it? Note for further discussion. Larsen: move to Dept. of Revenue; Legerski: pg. 26, vets tax exception, governor recommends denial of this 320 reduction for redistribution Sommers and Hibbert: discussion ensued about cuts and redistribution, backlogs, Legerski: pg.39, unclaimed property division, $130K for new filing system, system 20 y/o, overview given of unclaimed property and history of database, property claimed – how old or new Nicholas: update on WYO Star, pg. 33, investment pool, 173 participants, treasurer bearing costs of admin fees Gordon: created WYOSTAR 2, rewrites needed, fund manager – JP Morgan, Ted Afferfells Patrick Fleming, CIO, treasurer’s office, looking at alternatives as returns very low, options – ETF, low fees Gordon: communities re-educated to take advantage of this program, fees explanation Sommers: vacancies Legerski: org chart new one passed out, discussed vacancy changes, software service providers research and hire 12/4/2017 3:13:25 PM Gordon: better returns on money, risk considerations, discussion asset allocation, pools for equity, etc. Adjustments in systems before hiring investment staff Sommers: specific programs related to government? Hold up? Gordon: summarized how funds tip from one to the next, comparison with other state who are struggling with this Legerski: one to one works good, distributions to various entities seems to trip up investment firms Nicholas: Internal investment team Fleming: hiring presently - analyst on board, end of fiscal year to have entire staff hired, credit officer being considered, qualified applicants showing up? Looking for a fund manager Nicholas: review fund performance Fleming: overview of all funds, total fund returns, compare to our peer group, and have been in the bottom, asset allocation issues, rules changed to 70% equities investment should up our return Gordon: protocol to judge all sovereign funds, preservation of capital focus for WY Fleming: allocation index, PMTF return, school, PLF and UW, Hathaway scholarship, workers comp fund, tobacco funds discussed, security Wilson: allocation index question Fleming: discussion, manger performance, asked if more flexibility is needed, targeted certain asset classes and rate of return coupled with fees Nicholas: continuing discussion on investments and managers Gordon: getting strong structure in place before proceeding, simply processes being looked at, have all the tools needed presently, discussion continued, building multiple year returns Nicholas: capital gains Gordon: $1.78 M in realized gains, compared to other states, asset allocation, negatives – emerging market debt managers, Meyer rule, previous treasurer, routine dividends, interpretative policy with blessing of the Legislature 12/4/2017 3:55:02 PM Fleming: timing of capital gains difficult to predict, unrealized gains, harvesting affects fees Gordon: markets ups and downs, no advantage to stepping up market gains Fleming: performance of internal funds on handouts, pg. 7, discussion/explanation Wilson: Pg. 7 question Fleming: explanation given for page 7 questions/confusion Gordon: last exemption regarding Indian motor vehicle licensing tax exceptions, Pg. 48, move to new area layout, investment team member payments, talked CIO salary comparisons Dockstader: team pensions, individual incentives vs team incentives for longevity Fleming: some anomalies, comparisons to surrounding states Gordon: office building by attracting the best folks, compensation Larsen: talent raised in house or hires Fleming: big performer and run, building within the way to go, talent located here Gordon: investment office needs to connect with peers, partnering, collocate offices Schwartz: succession planning in the works? Fleming: don’t have the personnel to do it, no funding for interns, tool to build a bench and have a close contact with students Legerski: 320 reduction for Indian motor vehicle exemption program, not used max funding for years, flow through money, motor vehicle taxes 12/4/2017 4:45:25 PM Completed Agencies