House Retirement Committee, March 5, 2026

Transcript

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1. 0:08:15

   Folks, we're just at ease. We, uh, we have a committee rule for a quorum of eight, and we think, I think, uh, we have six here. Yes.

2. 0:08:22

   No, no, no.

3. 0:08:22

   Five. So we're just gonna find s- a few more members. It's a very busy day up here. Thank you.

4. 0:13:58

   Okay, Rick, you, are you r- you ready to go? Okay, folks, we're gonna go ahead and get started here in just a minute.

5. 0:14:07

   We're gonna go and get started. We don't yet have a quorum. Our quorum rules are for a number of eight. We have seven, uh, committee members here. Uh, these are not contentious, but we do have to, uh, abide by the rules. Uh, I'm going to recognize, um, um, Representative Townsend from the coast. I think we're, uh, reconsidering, uh, House Bill 969. Your mic's on, sir.

6. 0:14:32

   Thank you, sir. Thank you, Chair. Thank you, uh, er, uh, the rest of the committee. Basically, when we went back, we found out there could be a possible, uh, Medicare issue. So, uh, we worked with four different people on ledge council. We worked with, uh, HR director, and then, uh, two, uh, three other people outside in, in that insurance type industry, a consultant, uh, a chairman in the House, that she's an expert in this area. And then we also received, uh, good graces from the local, uh, HHS person, uh, in, th- that covers the southeast regarding the changes.

7. 0:15:10

   So basically what we're gonna do for this bill, the only thing changes from last time is change the status. Is let the school board member, if they get elected, to choose right away if they wanna be part-time or full-time. And then once it gets to the next stage of insurance and everything else, then it w- it would comply with the law however they chose, whether to stay on their retirement benefits or go to the new full-time status. And so by getting this in a little bit earlier, and with the, through another code, then that's, that's kinda how we're doing it.

8. 0:15:43

   And again, we had quite a few people on it for about a week to basically hammer this out to make sure we, uh, made it as tight as possible. And that's where we're at now. So-

9. 0:15:54

   So thank you, Representative Townsend. So l- l- if I could just, uh, maybe if I can just summarize it for the committee-

10. 0:16:00

    Thank you

11. 0:16:00

    ... for their consideration. You, you, you had a consti- constituent that retired from being 30 years as a teacher, or 32 years as an educator, correct?

12. 0:16:08

    Yes, sir.

13. 0:16:09

    Okay. And they decided to run for school board in your area, right?

14. 0:16:12

    Yes.

15. 0:16:13

    And as a result of taking full-time role with the school board, as a result, they lost their benefits to the State Health Benefit Plan, correct?

16. 0:16:22

    Well, they, they lost the current benefits. They still had benefits through SHBP, but it was different.

17. 0:16:28

    Right. And so what this basically does, and I, I would, uh, mention to the committee that Representative Townsend's been very patient, number one . Number two, uh, he's worked with, uh, the chair of insurance as well as the subcommittee chair, uh, uh, representative, uh, or chairla- lady, uh, Darlene Taylor, in regard-

18. 0:16:45

    Right

19. 0:16:45

    ... to health insurance on this. And I think you also worked with Chairman, uh, uh, Noel Williams-

20. 0:16:50

    I did

21. 0:16:50

    ... on this issue as well to address this properly, such that they, if someone in, in your, uh, constituent's role, if something were happened, like this were to happen again, they could choose a more or less a part-time status, and therefore they would not be precluded. They would, they would not necessarily lose their health coverage in the same instance. Is that correct?

22. 0:17:11

    Yes, sir. Well said.

23. 0:17:13

    All right. Does that help the committee? Okay. We have, let me take a look over here. We have seven as of right now. Uh, I, we cannot take, uh, take a action yet, but I'm happy to ask, uh, ask some questions from the committee.

24. 0:17:30

    I, I, Mr. Chairman, as, as an act-

25. 0:17:33

    Go ahead, uh, Chair Martin.

26. 0:17:34

    Thank, thank you. I just, I just know if you were just gonna lay this aside and go to the next bill and we, when we have a committee quorum, we can come back, or if you needed a motion to lay it on the table. Um, uh-

27. 0:17:44

    We're just gonna be more or less at ease on it.

28. 0:17:46

    Okay.

29. 0:17:47

    Um-

30. 0:17:47

    Then I have, I have nothing to add.

31. 0:17:49

    Okay. Very good. Unless the, the committee has any questions. So I, I didn't wanna, uh, move over that. I do have one more member, uh, coming. Thank you, Mary Frances, for making a few calls.

32. 0:18:06

    I see a podium. I don't see a member. There's Representative Wilkerson.

33. 0:18:11

    All right.

34. 0:18:15

    You act like you were in education or something.

35. 0:18:19

    Chairman Martin, did, did you finish your que- I believe you did, Chair.

36. 0:18:22

    No, sir. I was just looking for how you could move forward, but you now have, uh, the-

37. 0:18:27

    I, I, I very much do

38. 0:18:28

    ... you have the gentleman farmer from Cobb.

39. 0:18:33

    Any, uh, any questions for the author? Now I, I just wanna say, uh, Representative Townsend, Rick, you've been very patient. I'd appreciate you, I, uh, uh, you know, working us through the process. A- and, and working a solution that works for everybody in compliance with the, um, the Affordable, uh, Care Act of 20, uh, 2010. Uh-

40. 0:18:50

    Yes, sir. I appreciate that, and I would appreciate if I'm able to get out of committee if y'all say good things to the rules folks for me.

41. 0:18:56

    I sure will. Sure will. Number 11. Is that, I think that's Chairman Martin.

42. 0:18:59

    I still, I'm back to that. If, if you're, if you're ready, Mr. Chairman, I move do pass on HB 969

43. 0:19:03

    I have a do pass. Do I have... We have a second from, uh, Vice Chair Franklin. Any further discussion? All in favor say aye.

44. 0:19:11

    Aye.

45. 0:19:12

    Aye.

46. 0:19:12

    All opposed. Thank you for doing this on behalf of educators. Thank you.

47. 0:19:16

    Thank you.

48. 0:19:17

    Okay, we just have one more bill on the com- on the, for consideration. This is, uh, House Bill 1347. Uh, Chairman Thomas.

49. 0:19:28

    Uh, thank you, Mr. Chairman. Uh, uh, so Georgia House Bill 1347, uh, it amends Article 7, Chapter 20 of Title 47. And basically, um, it's, uh- Actually, it's involving, uh, public retirement systems investment authority law to expand investment options for certain public retirement systems by permitting investment in real estate. The bill also increases allowable percentage or cap on alternate investments for qualifying retirement systems. Um, and I think the al- overall purpose of this is to, uh, broaden the portfolio diversification opportunities for the Georgia public pension funds, and potentially improving long-term returns for the be- beneficiaries.

50. 0:20:05

    And that's the long and the short. And, uh, and we have about 30 minutes before EUT. I-

51. 0:20:11

    ... hope to take questions and-

52. 0:20:12

    You, you made it quick, and I appreciate it. Uh, I would just also, uh, add that, uh, in the members' packets, there is a letter of endorsement from, uh, the law firm Seyfarth Shaw. This, uh, this idea was brought to me back, I think it was, uh... I d- I don't know. Is Morgan Wurst here? Hey, Morgan. Um, I think I have you on the sign-up list. This wa- idea was brought to us, uh, brought to me in the fall. And it's basically because, um, if you look at the potential returns to the pension funds, um, obviously they're there with, uh, uh, with stocks and equity.

53. 0:20:48

    It's not been there recently too much with fixed income. And what these pension funds are looking for is a little bit more flexibility to invest in t- what are two categories primarily of what we call alternative investments. And I know that sounds, uh, m- may sound what it is. Um, but it's nothing really more than something other than registered stocks and registered fixed income investments, such as private equity, such as real estate and so forth. And what they're looking for is a little bit more diversification into assets that have a, um, a little, probably, they, they have a, a longer term, higher, uh, return profile than, say, fixed on- income or so forth.

54. 0:21:31

    What this does is it gives another tool in the toolbox, uh, uh, for, uh, investment managers in regard to these, uh, programs. Represent- uh, Chairman Thomas, anything i- am I online or...?

55. 0:21:42

    Uh, no, I would say that you nailed it there-

56. 0:21:45

    Okay

57. 0:21:45

    ... Mr. Chairman. And, uh, I think the DOAA sheet does a pretty good job, uh, backing up everything that you said as well.

58. 0:21:52

    Thank you. Thank you. Um, my lights are going. Um, I think number nine was first. Mary Frances Williams, go ahead.

59. 0:22:00

    Thank you, Mr. Chairman. I just wanna, um, point out it's my understanding that ERS and TRS are exempt from this. Is that correct?

60. 0:22:07

    That is my understanding, and I believe that is correct.

61. 0:22:10

    All right. Thank you.

62. 0:22:11

    And I checked with legislative counsel. That is correct, yes. I, I, I will say TRS has not wanted additional flexibility.

63. 0:22:19

    Yeah, that's right.

64. 0:22:19

    Correct. Um, Vice Chairman Franklin, and then we're gonna go to, uh, Chairman Martin. Uh, thank you for the bill. I just wanna know, did you have, uh, get AI to help you write that summary you just had up? Ooh. Wow. Wow.

65. 0:22:34

    AI.

66. 0:22:35

    Former chairman. That, that, yeah f- yeah, ex- Former Vice Chairman Franklin. Yeah. Exactly.

67. 0:22:44

    Uh, Chairman Martin.

68. 0:22:47

    Thank you, Mr. Chairman. You mentioned earlier that we, we have one bill that... And you, you said, like, is this primarily for a particular system? I, I don't have a problem with that. I just, if, if... I had a question i- if, if it was primarily for somebody. I, I'm, um... Isn't it true that I'm generally supportive of this and, and am today. I just had a quick question if it was somebody that was contemplating. If there's nobody in particular that was contemplating it, the question is moot.

69. 0:23:11

    If, if, if you take a look at what is defined as a large retirement system as defined in the code, and you can see exhibit A, which is page three of the letter, this includes, um... Actually, the first one is City of Alpharetta, uh, has signed on to this. Uh, most notably is City of Atlanta. I think we have one person si- uh, signed up to speak from City of Atlanta. Uh, Gwinnett County Public Schools, um, Georgia Firefighters Pension, you name it.

70. 0:23:34

    Well, m- maybe my question, c- my question would be then, um, maybe to them to come, is how, how would those decisions be made as to the real estate? And I, I would for one wonder about the law. Is it, like, are they able to purchase property from their mu- municipality? That, that gives me pause. If, if the retirement system fr- from one of these areas is, is buying property from itself-

71. 0:24:00

    Mm-hmm

72. 0:24:00

    ... um, I, I can see. That, that may already be prohibited by law or... But, but it would seem that that could, um, in- involve a bit of a conflict if the c- the city-

73. 0:24:10

    Well, look, look-

74. 0:24:10

    If the city needs money and it gets this retirement system to buy it out of an asset, I would, that would give me pause. But other than that-

75. 0:24:16

    Well, we have two people signed up that I think can answer that question.

76. 0:24:19

    I'll wait. Yes, sir.

77. 0:24:19

    How does that sound? Okay.

78. 0:24:20

    Absolutely.

79. 0:24:21

    Um, Morgan Wurst from Georgia Firefighter Pension fund.

80. 0:24:30

    I don't think he's on. He's still in his car.

81. 0:24:33

    Nope.

82. 0:24:38

    Go ahead, sir.

83. 0:24:38

    Thank you, Chairman.

84. 0:24:39

    Yes.

85. 0:24:39

    And, uh, Chairman, uh, Martin, I, uh, as to the r- the, uh, real estate question, I can tell you how... You know, we, we're one of, I believe, two funds that have been able to do real estate for, for quite a while. We got exempted out a while ago. And, uh, we haven't done any yet, uh, for about seven or eight years. Um, but generally, uh, generally the way it works is they get into a pool, um, a fund with other accredited investors.

86. 0:25:13

    Um, I will say you are allowed to own your own building, your own property. Um, the, that's always been the case. So, like, where we are, we actually own the property. So i- in theory, they could probably do that if they did a property switch, but you would wanna make sure that it was for the right function.

87. 0:25:33

    Mm-hmm.

88. 0:25:34

    Yeah. Um, so, uh- This, this bill will not affect our fund. We've, we've been kind of doing this for a while. But I will point out, uh, because I, I do come into contact with a lot of funds around the state, and they're interested in doing alternatives. The normal, the, what, what I've seen so far, it's mostly people doing private equity, as Chairman Carson pointed out, and some private credit. Um, we've, we've done a very little bit, and that was a long time ago.

89. 0:26:04

    Uh, so ours is, uh, predominantly, uh, private equity. But the sliver that we're given, uh, if you are invested in private equity, how the state values it is, um, you- the way it works is you make a commitment to pay money over time, and a, a, an investment manager will call that money and purchase companies. And then when those companies are sold, the money will come back to you. And, um, we, uh, you know, that's, that's sort of how, how it works.

90. 0:26:35

    But they count this uncalled commitment. So if you make a $50 million commitment, it mi- it will take, it will take six, seven years for that money to get called, but the state says, "No, you're, it's, it's 50 million." And in fact, most cases, it doesn't all get called. So we have to work with that. So keeping that in mind, it's very difficult to jump from 0% to 5% to 10%. If you do it correctly, it takes a long time to build up. So after... We've been doing this since 2011, and we're up to about 8% now.

91. 0:27:10

    Uh, that's private equity. Some of these other... The, the, the ability, making that, I guess, uh, more arrows in the quiver, these new arrows will allow people to invest more if they're already doing that in private q- equity and private credit. But it also introduces maybe some other strategies: farmland, timber, infrastructure. Um, these are all assets that are long-lived, and they kick off income. And income's very important to a pension fund because that income is what we use to pay the beneficiaries.

92. 0:27:46

    And, um, most of the, the public equity, it's through appreciation. It's not... You know, we do have some dividend income. And frankly, on the bond side, as Chairman Carson pointed out, it's investment grade only. So, um, you're, you know, what you're looking for long term in that, historically, is gonna be somewhere 3 to 5%. And I don't think there's any pension funds in the state that have assumed rate of returns of th- 5% or below. Um, so this adds some investable assets, and some of them potentially could be in Georgia.

93. 0:28:24

    I'm, I'm just saying, you know, there's that. But infrastructure would be bridges, would be airports, um, uh, ports. You know, investing in that, once again, give, kicking off income. Uh, and then real estate, you know, it does add real estate to the mix. And once again, it's a long-lived asset, generates cash income. Yes, uh, there, these are... To me, these assets are no riskier than investing in public equity.

94. 0:28:54

    A lot of them, it's actually, uh, less risky. However, the risk comes with, um, how long your money is locked up, and that's the liquidity premium. So you're expecting a little bit more because they're holding onto the cash longer. So, um, but that's not a problem in the state because the way it's designed, um, with 10 per- 10% in alternatives, that means the rest of your, the rest of your portfolio is invested in public equities or, or, uh, investment grade debt. Your invest- You know, you should be able to meet all liquidity needs that you have, uh, providing you have the money.

95. 0:29:30

    Um, and then, you know, this just takes a little sli- sliver of that and invests it a l- the ability to invest it a little bit more long term. So to make a long story, um, to make a long story short or a short story long, uh, this, this bill, you know, once again, it's important to remember the bill makes these investments allowable, not mandatory. And I will point out it, it will be important, most of the funds in the state, save for, save for the teachers and employees and maybe, maybe Georgia Muni and, and a couple others that have m- a, a lot of investment staff, uh, pension funds will be relying heavily on their investment consultant to help, uh, to help find, source these investments and make that investment decision.

96. 0:30:14

    So it will be important for, uh, funds to look, make sure they have a capable consultant in this area. If not, hire one that is. Thank you, Mr. Wurst. Uh, Chairman Martin. Yeah. Mr. Wurst, I just wanted to tell you, um, I think it was maybe six or eight years ago now that you, you guys took over, uh, or stepped into a bill I had, um, intended for one of the other retirement systems to allow for alternative investments. They didn't want it, and you guys did. Yeah. And, um, I, I think it's, it's done real well for your, your members, and I apo- applaud you for, uh, taking that leap of faith, believing in, um, the economy and, and diversifying into alternative investments.

97. 0:30:52

    And you got the, you got a great return for your members. Yeah. I mean, thank you. Um, you know, it's all, it's all about our firefighters. And, um, you're right. Since, uh, since inception, since 2011, the money that we've put into that has generated an internal rate of return of 14.68%. So I like that. I'm sorry. I couldn't hear you. What, you, for how much? 14.68%. 14.68. Our assumed rate of return is 5.75%. How have you achieved that, would you say? Just, um, we, we do it through fund to fund.

98. 0:31:24

    So we, we invest with private equity managers who then put it into smaller funds for us. There is an added layer of fees, but we knew that going into it. And the, the returns I'm telling you are net returns, so that's, that's after fees. After the fees and so forth. Mm-hmm. Yeah. Very, very good. Okay. Had me at hello.

99. 0:31:46

    Any further questions, uh, from the committee? We, uh, we do have one more speaker. Um, thank you, Mr. Wurst. Um, Mohammed Balla. Do I have that right?

100. 0:31:58

     Yes. Thank you. Uh, thank you, Chairman, and thank you, Committee. I'm Mohammed Balla. I'm the Chief Financial Officer for the City of Atlanta, and I'm here today in, in support of HB 1347. I think it was very already eloquently stated that this just gives us much more optionality, uh, to our pension plan. As you know, the city has one of the largest, large systems with the police, fire, and general employees plan that's combined about $5 billion. And so, um, it's real important for our retirees to make sure that we have these resources and y- we have these options in our tool, uh, kit.

101. 0:32:35

     I would like to get to that 13%, uh, as well. Um, we're, uh, we have a, a,

102. 0:33:58

     a, an, a consultant that helps us with our, um, allocation decisions. So wouldn't be, uh, buying or purchasing buildings from the city, 'cause we'd have to meet that fiduciary requirement of the consultant as well.

103. 0:34:14

     Any questions for Mr. Balla? And I want to say thank you for coming here on, uh, on short notice. I appreciate that.

104. 0:34:21

     Thank you.

105. 0:34:22

     Chairman Martin. If y- if you don't mind just waiting just one moment. Chairman Martin.

106. 0:34:25

     I'm ready, I'm ready to give the man what he's asking for. If you're ready for a motion.

107. 0:34:30

     You won't get that many times from Chairman Martin during a session.

108. 0:34:33

     Ha- had me at hello.

109. 0:34:34

     Mr. Balla, I would suggest you take it.

110. 0:34:35

     Thank you.

111. 0:34:37

     Go ahead, Mr. Chairman.

112. 0:34:38

     I, I, um, if I'm recognized for a motion, I move to do pass on House Bill 1347, LC56-0549.

113. 0:34:46

     I got a motion do pass. Do I hear of a second?

114. 0:34:48

     Second.

115. 0:34:48

     I got a second from, uh, Representative Wilkerson, Chair Wilkerson. Any further discussion?

116. 0:34:54

     Distinguished former colleague.

117. 0:34:57

     All in favor say aye.

118. 0:34:58

     Aye.

119. 0:34:58

     All opposed say no. Congratulations. We are adjourned. Thank you, folks.

120. 0:35:04

     You had me when you said former. You got Shea and the commission.

121. 0:35:07

     Yep.

122. 0:35:08

     I gotta run it over there and drop it off, but that's- This one, that one's, um, the one that Chairman Townsend- Oh, I know. I was like...