BETTER MEASUREMENTS:RISK REPORTING FOR PUBLIC PENSION PLANS

September 21, 2018 Taubman Building, 5th Floor Harvard Kennedy School Cambridge, MA

INTRODUCTION

Last October, the Mossavar-Rahmani Center for Business & Government

at the Harvard Kennedy School held a conference on the “Gathering

Storm: The Risks of State Pension Underfunding.”

One of the important conclusions from this conference was the difficulty

of measuring risk at public pension plans in a way understandable to

multiple audiences. Equally difficult is comparing various plans each

using different yardsticks.

Today’s conference is designed to plumb these questions further.

In particular:

• What are the objectives of measurement?

• What is the current state of play?

• Can we agree on a uniform set of best practices?

The Mossavar-Rahmani Center for Business & Government is pleased

to bring increased focus to the problem.

We are grateful to our colleagues who have formal roles in the program,

to those joining us as guests, to Bob Stein and Greg Mennis who helped

design the program and to The Pew Charitable Trusts whose support

has helped make this conference possible.

Roger B. Porter

Co-chair, Better Measurements Conference

IBM Professor of Business and Government, Harvard Kennedy School

Thomas J. Healey

Co-chair, Better Measurements Conference

Senior Fellow, Mossavar-Rahmani Center for Business & Government, Harvard Kennedy School

AGENDA

9:00 am Breakfast

9:30 am Goal of Conference and Statement of Problem

Thomas J. Healey Senior Fellow, Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School

9:45 am Session I: Objectives of Measurement What do users of information need to improve decision making?

1

Moderator: Robert SteinErnst & Young Partner (retired) and Chair of the SOA Blue Ribbon Panel on Public Pensions

Budget Expert: Benjamin BarnesSecretary of the State of Connecticut, Office of Policy and Management

Academic: Donald J. BoydFellow, Lincoln Institute of Land Policy and Senior Research Fellow at the Center for Policy Research, Rockefeller College, University at Albany

Professional Organization: John HicksExecutive Director, National Association of State Budget Officers

Public Policy Expert: Keith BrainardResearch Director, National Association of State Retirement Administrators

Actuarial Practitioner: Gene KalwarskiCEO and Co-Founding Partner, Cheiron, Inc.

Rating Agency: Todd TauzerDirector, Municipal Pensions, S&P Global Ratings

Poll #2: What information do we need?

Poll #1: What are the major risks?

11:30 am Break

11:45 am Session II: Current State of Play

12:45 pm Lunch

2

AGENDA (continued)

Moderator: Robert R. GlauberLecturer, Harvard’s Kennedy School of Government and Visiting Professor, Harvard Law School

Governmental Accounting Standards Board (GASB): Dean Michael MeadSenior Research Manager and Coordinator, Governmental Accounting Standards Advisory Council (GASAC)

Actuarial Standards Board (ASB): Kathleen A. RileySenior Vice President and Actuary, Segal Consulting

Blue Ribbon Panel: Robert SteinErnst & Young Partner (retired), Chair of the SOA Blue Ribbon Panel on Public Pensions

Plan Sponsor: Robert A. WylieExecutive Director, South Dakota Retirement System

1:45 pm Session III: Can We Agree on a Uniform Set of Best Practices?

3:15 pm Conclusion and Going Forward

3

Grid of Approaches to Measuring Risk: Greg MennisDirector, Public Sector Retirement Systems, The Pew Charitable Trusts

Roger B. PorterIBM Professor of Business and Government at Harvard University

Strawman on Risk Reporting: David DraineSenior Officer, Public Sector Retirement Systems, The Pew Charitable Trusts

Moderator: Robert SteinErnst & Young Partner (retired), Chair of the SOA Blue Ribbon Panel on Public Pensions

Poll #3: Methods and Applications of Risk Reporting

Poll #4: Measurements of Risk Reporting

Poll #5: Group Discussion: Do we want standardization and accountability?

PARTICIPANTS

Jean-Pierre Aubry Boston College

Susan Banta The Pew Charitable Trusts

Benjamin Barnes State of Connecticut, Office of Policy and Management

Andrew Biggs American Enterprise Institute for Public Policy Research

Donald Boyd Lincoln Institute of Land Policy and the Center for Policy Research, Rockefeller College, University at Albany

Keith Brainard National Association of State Retirement Administrators

Alex Brown University of Illinois

Allan S. Bufferd Massachusetts Institute of Technology

Michael Clowes Pensions & Investments

Matthew Cook Laura and John Arnold Foundation

David Crane Stanford University

David Draine The Pew Charitable Trusts

Brenna Erford Laura and John Arnold Foundation

Teresa Ghilarducci New School in New York

Leonard Gilroy Pension Integrity Project, Reason Foundation

Robert Glauber Harvard Kennedy School

Josh Gotbaum The Brookings Institution

Thomas J. Healey Harvard Kennedy School

John Hicks National Association of State Budget Officers

Sarah Jones The Pew Charitable Trusts

Gene Kalwarski Cheiron, Inc.

Emily Kessler Society of Actuaries

David Knapp Rand Corporation

Scott Leland Harvard Kennedy School

Dean Michael Mead Governmental Accounting Standards Advisory Council (GASAC)

4

Greg Mennis The Pew Charitable Trusts

Charles E. F. Millard Kiski Group, Inc.

Douglas Offerman Fitch Ratings

Roger Porter Harvard Kennedy School

Robert Pozen Massachusetts Institute of Technology

Laura Quinby Boston College

Kathy Riley Segal Consulting

Jay Rosengard Harvard Kennedy School

Devjani Roy Texas Tech University Health Sciences Center

Brian Septon The Terry Group

Scott Shepard Yankee Institute

Alec Stais State of Rhode Island

Bob Stein SOA Blue Ribbon Panel on Public Pensions

Eugene Steuerle Urban Institute

Todd N. Tauzer S&P Global Ratings

Marcia Van Wagner Moody’s Investors Service

Rob Wylie South Dakota Retirement System

Yimeng Yin Rockefeller Institute of Government

Support for this conference was provided in part by The Pew Charitable Trusts

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HARVARDKENNEDY SCHOOL

Conference Location: Harvard Kennedy School Taubman Building, 5th Floor Cambridge, MA

Enter the Kennedy School’s Taubman building

and take the elevator to the 5th floor.

Parking: Charles Hotel Garage 1 Bennett Street

Harvard Square Parking Garage 20 Eliot Street

**

Administrative contacts: Victoria Groves, cell: 978-726-3621 Scott Leland, cell: 617-413-0249

*