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| INVESTMENTS: INVESTMENT POLICY |
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Roles and Responsibilites
Board of Trustees
The board of trustees bears the ultimate fiduciary
responsibility for the investment of system assets. Members
of the board must adhere to state law and prudent
standards of diligence with respect to their duties as
investment fiduciaries. Accordingly, they are required to
discharge their duties in the interest of plan participants.
They must also act with the same care, skill, prudence, and
diligence under the circumstances then prevailing that a
prudent person acting in a similar capacity and familiar
with those matters would use in the conduct of a similar
enterprise with similar aims. Specifically related to
investments, the board is charged with the duties of
establishing and maintaining broad policies and objectives
for the investment program along with the
recommendations of staff and the external asset consultant.
Executive Director
The executive director is appointed by, and serves at the pleasure of the board.
The board has given the executive director broad authority for planning, organizing,
and administering the operations and investments of the system under broad policy
guidance from the board. Specifically with regard to investments, the executive
director is broadly responsible for the oversight of the investment program.
He or she must ensure that system assets are invested in accordance with the
board’s policies and that internal controls are in place to safeguard system
assets. The executive director must also certify that all manager hiring and
firing decisions and strategic allocation decisions made by the CIO and the
external asset consultant are in compliance with the board's governance policy.
Chief Investment Officer (CIO) and Internal Staff
The CIO serves at the pleasure of the executive director, yet has a direct line
of communication with the board on investment-related issues. The CIO has primary
responsibility for the overall direction of the investment program. The CIO
works with the external asset consultant and executive director in advising
the board on policies related to the investment program. The CIO has primary
responsibility to make hiring and firing decisions related to money managers,
but must have the approval of the external asset consultant in so doing. The
CIO is also charged with the responsibility of making strategic allocation decisions
with the approval of the external asset consultant. Other responsibilities of
the CIO include monitoring the investment of system assets, oversight of external
money managers and the internally managed portfolios, and keeping the board
apprised of situations which merit their attention. The internal investment
staff is accountable to the CIO.
External Asset Consultant
Summit Strategies Group of St. Louis, Missouri serves as the system’s external
asset consultant. The external asset consultant works at the pleasure of the
board. The primary duties of the external asset consultant are to advise the
board on policies related to the investment program and to provide a third party
perspective and level of oversight to the system’s investment program. The external
asset consultant must also approve all manager hiring and firing decisions and
strategic allocation decisions made by the CIO. The external asset consultant
also provides advice and input to the CIO and internal investment staff on investment-related
issues and money manager searches.
Internal Auditor
The internal auditor reports directly to the executive director and, if in the
opinion of the internal auditor circumstances warrant, may report directly to
the board. The internal auditor is independent of the system’s investment operations
and, among other things, is responsible for providing objective audit and review
services for the investment operations. It is the internal auditor’s objective
to promote adequate and effective internal controls at a reasonable cost which
result in suggested improvements that will lead to economies and efficiencies
in the system’s investment operations.
Master Custodian
Mellon Financial Corp. of Boston, Massachusetts serves as the
master custodian of the system’s assets, except in cases where investments are
held in partnerships, commingled accounts or unique asset classes where it is
impossible for them to do so. The master custodian is responsible for maintaining
the official book of records, providing performance reports, and serving as
an additional layer of risk control in the safekeeping of system assets.
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