Committee on Appropriations A/V — 2017

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Mr. Matthew L. Clark, State Investment Officer, State Investment Council, introduced staff and presented the FY18 budget request to the Joint Committee as recommended by the Governor00:02:20
Mr. David Hillard, Chair, State Investment Council, presented report to the Joint Committee00:02:30
South Dakota Investment Council FY18 Budget & Investment Performance - Page 100:02:31
Organization Chart - Page 200:04:25
Assets - Page 300:05:10
Cost Efficiency - Page 400:05:53
Long Term Plan Executive Summary - Projected (LTP) Budget - Page 500:07:40
Budget Funding Sources - Pie Chart - Page 600:10:51
Compensation Overview - Page 700:11:25
Representative Hunhoff - question what is culture of typical State Investment Council employee00:13:45
Compensation Overview, Continued - Page 800:15:30
Fiscal Year 2016 Budget and Actual - Page 900:20:10
Representative Peterson - question are all staff eligible for incentives and how do you determine incentives00:22:14
Representative Lake - question how do investment employees cover the portfolio when there are vacant positions00:26:42
Fiscal Year 2018 Budget Request - Summary - Page 1000:29:10
Fiscal Year 2018 Budget Request - Contractual Services Detail - Page 1100:34:30
Investment Performance - Returns versus Benchmarks - Page 1200:36:36
Investment Performance - Earnings versus Benchmarks - Page 1300:43:33
Superior Returns Add Up Over Time - Page 1400:47:08
Potential Excess Earnings - Chart - Page 1500:47:26
Many Pistons Contribute - Chart - Page 1600:47:45
Every Asset Category Has Good and Bad Years - Page 1700:47:55
Trust Funds (Estimates and Unaudited) - Page 1800:49:00
Trust Funds (Estimates and Unaudited) - Page 1900:49:24
Appendix - Page 2000:51:14
Investment Performance Incentives - Aligns compensation with goal of adding value - Page 2100:51:25
Senator Nesiba - question how much in investment revert to the general education funds00:51:46
Mr. Rob Wylie, Executive Director, South Dakota Retirement System, made FY18 Budget Request as recommended by the Governor00:58:00
Written Questions for the South Dakota Retirement System and the Investment Council (handout #2)01:01:00
Define a Fully Funded Pension Plan - Question 1 and Question 2 - Page 1 01:09:15
Representative Anderson - question when do you calculate the net present value to determine anticipated earnings01:17:45
Is SDRS fully funded? - Question 3 - Page 201:19:20
Is it stable and how do you determine stability? - Questions 4 & 5 - Page 2 and Page 301:25:00
Is there any debt in the plan and when would it be appropriate to take on debt in a pension plan? - Questions 6 & 7 - Page 301:27:10
Is it fair to say that SDRS is currently giving out more money than it is taking in? Question 8 - Page 301:29:49
What would you like legislators to tell their communities about the plan, its people and the long-term viability? Question 14 - Page 601:33:00
Is there an instance when the plan would not be able to meet its obligations? - Question 10 - Page 401:35:08
FY18 Budget Request - South Dakota Retirement System - No changes in expenditure authority01:39:05
Senator Cronin - question what is the status of the payout to cement employees01:40:20
Representative Hunhoff - question what happened to payouts, contributions, and current employment of cement plant workers01:42:54
Rich Sattgast, State Treasurer (Introduction of staff)01:45:56
Mission and duties of the Office of the State Treasurer01:47:10
Efficiencies implemented in the Treasurer's Office01:47:42
Treasury Management 01:48:50
State Treasurer's share of state general funds amounts to 0.04%01:50:08
Agency FY18 request is identical to the FY17 budget request at $541,831 and 5.2 FTE01:50:53
Treasury Management takes in an average of $1 million in cash and checks each day01:51:50
Treasury Management takes in an average of $15 million in electronic transfers daily01:51:58
Treasury Management maintains every banks quarterly reports01:52:32
Treasury Management monitors the state's veterinary grants01:53:05
Treasury Management initiates the award of state funds deposited with financial institutions for investments totaling $35 million annually01:53:40
Representative Carson question on veterinary clients not in compliance01:54:14
Senator Tidemann question regarding the "recovery center"01:57:35
Representative Carson question on grant qualifications01:57:56
Unclaimed Property01:58:08
State takes in approximately $8M-$9M per year, returning approximately $2M01:58:28
Treasury Management - CD Rates01:58:46
Unclaimed Property - The state takes in an average of $8M-$9M/year and returns an average of $2 million02:00:03
Discussion of Unclaimed Property activity02:00:29
Lee DeJabet, Administrator of Unclaimed Property02:01:02
Unclaimed Property budget discussion02:01:09
FY18 request is for an increase of $4 million in other funds for expected increases in unclaimed property payments02:01:19
In FY16, the total amount of claims paid was $19,407,85302:02:26
$12.7 million has been returned as of December 31, 201602:02:39
Bulk of money returned in 2016 was to foreign accounts02:03:18
Dollars received have stabilized as well as bank mergers02:04:45
The sale of stock shares resulted in an additional $7.5 million in one-time receipts in FY1702:05:44
Representative Anderson question on history of claims on stocks 02:06:34
Representative Peterson question on liquidated property02:11:10
Senator Nesiba question on how it is determined that an owner will be found and make a claim02:14:38
Senator Tidemann question on revised revenue from Unclaimed Property02:17:17
Ms. DeJabet estimated the revised revenue from Unclaimed Property would be $50 million02:18:30
The fund received approximately $14,000 last year as a result of bond sales02:18:59
Senator White question on inventory of savings bonds02:20:10
Representative Bartels question on the $50 million estimated revenue02:22:58
The Treasurer's Office will have an auction this spring of coins, jewelry and other valuables02:24:13
Treasurer's Office Survey results02:26:00
Ryan Brunner, Commissioner of School and Public Lands02:28:23
School and Public Lands Office History02:29:40
Surface Division02:31:40
Representative Ahlers question on retention of mineral rights02:33:00
All leases are for 5 years with a 5 year option and is leased at public auction02:34:32
Currently have over 2,800 leases on 760,028.851 acres02:35:45
Execute Easements and land sales for other agencies in state government02:35:49
Lessee pays property taxes02:35:58
Easements have become a big part of the agency workload02:38:40
Surface Revenue by Land Class totals $6,308,235.6302:41:40
Surface Division Highlights: Record year of surface revenue at $6.3 million02:43:05
Senator Tidemann question on Springfield surface revenue02:43:47
Representative Lake requested information on location of the land02:44:27
Surface revenue up 40% since 201002:45:43
2017 new AUM base rate is still being calculated. The AUM rate sets the miimum price prior to the public auction02:46:25
Senator Cronin question on how leases are set02:47:30
Mineral Division - State owns 5.2 million acres of mineral rights02:48:06
The higher price of oil and the more pumped out the more funds for the SPL Trust Fund02:48:50
50% of revenue paid out annually and 50% to the SPL Trust Fund02:49:00
Senator Nesiba question on comparison of royalty rates with neighboring states02:50:14
Representative Lake question on relationship with owners of the surface owners vs. mineral rights02:53:15
Representative Ahlers question regarding leases for solar and wind energy companies02:55:25
Senator White question regarding length of lease for exploration02:57:08
Permanent Trust Fund02:58:00
Constitutional amendment in 2000 allowed the fund to adjust for inflation and02:58:20
Invest in stocks through the South Dakota Investment Council02:59:30
Current trust fund value is $278 million03:00:10
Dollars to Education: money earned in previous year03:01:05
FY17 payout is revenue generated in FY16 and totals $10,196,470.8303:01:10
Dollars Returned to Universities totals $1,594,378.8303:03:32
Dollars Returned to Endowed Institutions totals $671,280.5403:04:01
99 State owned dams under SPL 03:05:24
FY17-18 School and Public Lands Revenue Outlook03:06:00
Surface Leasing - consistent03:06:04
Oil and Gas - some rebound03:06:45
Permanent Fund - in good position but only interest and dividends are paid out03:06:57
FY16 Completed Work on Dams03:07:44
FY17-18 special appropriation year-to-date repairs03:09:43
Bednar Dam repair03:10:09
Campbell Dam repair03:11:25
FY18 Budget - no change in base budget from FY17 or FY1603:12:33
FY17 and FY18 Planned Land Sales/Exchanges03:16:35
Representative Carson requested information on the Rushmore Building03:27:10