Agency Presentation - FY15 - SIC Monday, February 03, 2014 3:53 PM SD Investment Council FY 2015 Budget Presented to Appropriations Committee February 6, 2014 • Organization Chart • Assets • Cost Efficiency • Budget Process & Long Term Plan • Compensation Overview • FY 2013 Budget Review • FY 2015 Budget Request • Investment Performance • Trust Fund Summaries • Appendix
Organization Chart Cl"'RRI:... Yf COl"N"Cil. ;\ffi\mI::RS1 Hup M 8.ni!h.. \!/zato\\n ( Owr ) for: H~ ~iir . !i. aibon · ~• O:.zi:- ) Jmi1-!u&.. Y:cl:t:Ai. D.- .id Hill,,<!, Ra,,od Ci;, St~1 -t K.i. ~,SioirtF .tl h \' m:i Lmoo, S&PL Ccmtmm:,mr R..t<l=d S.~ 1, Sfll! I ,UJ.Ur~ Rob \\}· It SDRS Admmiim.t.:, r 61:c:.,u Scn1 =1, · Mrni;s R!CA!~DW1 LAr.,R~: Al.Jl'JIC~ A m!r.n11~ctr A i.s t k\"1:ll:Oft.ci!r Olo t ;a! E,;: A:\r.1:np : ~tJtl:,c:o=.1~- Jm :r.w T:r ~ , O:: n: !rhrt!ol:ol\~,r-!I' ~o) ,{&r:1J!I' S: i\m:01:i,J.::WJ:u C-'.oh l lq:Q Q-!obl l ~.~ - :" i µdl:.tGruiHi:$11' ~o:fz\,1~ !!n,!c'li;, ' !: M l ::4 Hi1' c~ Ia SMr-,.\) ) .:0 .11 MtD'.lt!!J!.'l CM4,, Pi r~ t'Ml ~lioM.u..i,, r ,'ort;cl::or.!'c;1c- O:O !l~:E.ltiC'I' 0:0t-J.:!,;~ lnn!.~!ll 1 )a,r lH .{ • C~C'~"''lf" Anot Port!"cl.o ).Ip A c:IF.IWAI Si;:~C:C'I;~ S,,.i"""" h, 1:d £1,;,,: ilorc'e~ch!et!!:' ,\!w.: ?M'l!o ~c M!r C:lob&J~ - - C-'.ob1.1!q,'Grj ln-tit=.u;.1 ~ I H'1UI "'""'".a•hit:t:C J.uot,o!".!otoM~ Au 1:P;:e:o:ia.:M;: Ac, ur. 11:L:J:.: C'.oe ,• .J.. '!1:l.!h\"ltl.6 !e).!:.dC4?E, f'! /;))!!2JSU I IJ, ' DtRJ ,i:tM,,,, J ' arat >.uo;;,'«.:iol.tM,r Alw;,'11 !1:11 !;0W11 0".ol:l.1l ! , ;:1.:ty O!ob:1:~ · lnni~~ , Jt§E!!l/~:11. ~Sp3"..:, R.~Ar.&. ' yn A. CttrlUW ~~C:C'I;~~ i'.t.w.;;;1:Am.]Ji; ~ · i'L.*>"l;l' ri:1= C4c\· J.. 1:i~gt:\'1tld .JJ!t'A Do:.Jtn .U !o.=~!mbM!I' C:.obL!:;_'CCf - l,:,t;:tJ/ad~ ' b ... ~ • ,20) 4
Assets (FY14 preliminary estimates as of 12/31/13) risu l Yun 197J to 2013 alld Jiscill Ye.r 2014 tbtOU&h Orumbt.r 31.1013 (ertJ Sin Millions • Sotsth Dakota Re ·rement System $ 9,937.7 79.5% • Health Cdre Trust Fund 128.5 1.()% D Educat i on En hancementTrust Fund 467.8 3.79' • Cement Plant Re ·rement Fund 59.9 0.5% D school & Pub h c Land, Fund 248.0 2.0% D Dakota Cement Trust Fund 294.8 2.4% • Sotsth Dakota cash F low Fund 1,360.9 10. 9'!6 S 12.497 .6 100.0% 2
Cost Efficiency Management Fees 1. 700% •• 1. 04 0% 0.731% 0.5 90% 0.4 33%* 0.085 %" S::.•...c -· ... "'"""' ""'" S!:>iO SJIO Sl Bllcn Med-a-i (Si,- ' ..... llttf?'-i l &. ""1.-:.Jil IIUf'l"-i HK111n ,\_~.t- VI "'" Ptr..1JC1n Out,.- """' AJ:11tNx ) Mat1.c;~, Mi ~~ Di fference between SD IC cost of .433% and benchmark cost of .731% is $33 million per year • SD IC projected expenses fo r FY 201S us in g exp ected average performance incent iv es • Plus 20% profit part icipation after preferred return 3
Budget Funding Sources Trust Funds· 9.2% • South Da k ota Reti rement System· 79.2% • C.am•nt Plant Rotir11mont Fund· 0.5% a Cuh Fl ow Fund· 11.1% O~kota Camont Trust· 2.4% Educati on Enhancement Trust· 3.8% Health Cara Trust· 1.1% School & Pub li c Lands· 1.9% Budget funded by assets under management 0% General Fund appropriation Note: S&PL share of SDIC expenses paid from earnings of Cash Flow Fund -1
Budget Process & Long-Term Plan • Budget o Budget approved by LRC Executive Board before presenting to Bureau of Finance and Management and Appropriations Committee (SDCL 4-5-22) o Budget deducted from assets under management, no general fund appropriations (SDCL 4-5-30) • Long-Term Plan o Developed Plan in 1987 - has helped guide operations for 27 years o Recommended by Appropriations Committee and Executive Board o Key to development and retention of high-quality internal investment team
~ ~ ~ Long Term Plan Executive Summary Projected LTP Budget f!1lli INVESTMENT OFFICE BUDGET Personal Services Jlllmber of Employees 30 34 3• Base Compensallon - T otal Star ! 396,985 6 757 537 8,567 646 lntem Council members . Longevity 37.055 48.297 61432 Flexibi l ity funds-Retirements & Resignations 1sana 1 -40 .-43 1 162 798 Investment Incentive axi m um 7 323 , 947 lt , 711 908 15 , 073511 Benefits 1. 849,403 2.851 759 3,614 1l6 Total P ersonal Services 13 747, 820 21 ,5 32 300 27, SOS 4S2 Operating Expenses Contr actua l Services 1 552. •87 1 83S 19' 2,098 241 Travel 85,000 1092•7 126647 Office Supplies & Postage 12 ,733 16 729 1939 • Caplt al Assets 43 . 000 50710 S8 787 Total Operating Expenses I 693,220 2 011 880 2, 303069 Total lnvesoment Council Budget 15 441 ,039 23.544 180 29,808 521 ASS ET SUMMARY • Internal Assets 5.186431, 32 4 11154502050 14 144, 004113 External Assets 3. •55 834,404 4 337 861 908 5500 , '46044 Total Assets 12 . 342265 .727 I 5 492.363 9S8 19644 .450 156 EXPENSE SUMMARY Inte rnal Expenses 15 .. , .039 23, 5U 110 29,808 521 EXlernal Manager fees .47 ,71 6 431 38 014 , 178 60,504 906 T otal Ex p enses 90,313 427 53 455.218 7 1260 661 UN IT COS T SUMMARY Internal Expenses as% or T otal Assets 0 1 52'11, 0 125% 0 152% Internal Exp as% or Total Assets c ..;1ussLme<1 ""9 lwPerlh:nll 0085% 0100% 0099'11, T olal Expenses as % of Total Assets 0.433% 0460'11, 0460 % "Projedons bned on long-term as:uneo retlms appled 10 6'30ll 3 usets Updaled each J\l'e 30 tfote FV1Samouisdiffefftomactualbudgel requesl The lW hides an asslJ'Tled 3% nlary polcy 6 ard does not lncble mlscelaneous BFM aeljusrnens .
Compensation Overview • Long term results have significantly exceeded benchmarks - Added over 25% beyond benchmark to SDRS assets in the past 15 years • Continued success dependent on high caliber team - Internally manage most assets using internally generated research • Future team depends on retention of talent pipeline and trainers Develop internally as cannot compete for top tier experienced talent • Compensation plan aligned with goal of adding value over long term - Motivate superior long-term performance and retain successful staff • Compensation plan revised in 2006, updated in 2010 and 2013 - Council target is 70% of cost of living adjusted median i ndustry pay to balance gett ing a good deal for South Da kota wi thout losing the good deal if we cannot keep our people - Incorporates performance incentives (range of Oto 100%) which are expected to average 50% with continuation of SDIC historic level of superi or performance - Pay was increased to 70% target after 2006 study 7
Compensation Overview, continued • 2013 study indicated compensat ion is below 70% target - SDIC pay at 55% rather than 70% of cost of living adjusted in dustry median • Council believes important to get back to target compensation Want to provide best chance for future success • Council seeking support for increase in incentive plan to get to target - To expected average of 80% (0 to 200%) adding longer term and stretch incentives - Incentives aligned with the goal of adding value and only pa id if add value • Cost efficient due to interna l management capabilities - Securing team to preserve internal capabilit i es best chance to remain cost effici ent - Expected internal costs under .1% even with increased incentives 8
FY13 Budget and Actual Unexpended credited against FY14 Ac1ual Exp Budget Rec 'd illlli .E..'!JQll Un expended PERSONAL SERVICES Base Compensation Base Compensation - Investment Staff 3 1 06 . 074 3. 259 . 847 153.773 ' Base Compensation - Accoun ting & !D ! Adm inistrative 347 , 507 347 , 507 TOTAL STAFF 3, 453 . 581 3, 607 , 353 153 , 772 Total In t ern , Council , Longevity 15 . 650 17 . 890 2, 240 Benefits 694 374 817 . 281 122 907 Total Base Compens.ition 4,1 63 , 605 4 442 , 524 278,919 Investment Performance Incentives Maxrmum Potential lnvestrnent Pert l ocentive 1,985,287 2, 553 , 797 568 , 510 Benefits 273 , 970 208 , 645 !65,325) Total Investment Performance In centives 2.259,257 2. 762 . 442 503 ,1 &5 Total Personal Services 6. 422 . 862 7. 204 966 782 , 105 OPERATING EXPENSES Contractual Total ( see appendi x for ine item deta ib) 1, 221 . 329 1, 473 , 677 252 , 348 Trave l 57 , 085 65 , 700 8, 615 Office S~plies & P ostage 12 . 131 12,733 602 Cap~al Assets 27 970 28 . 242 272 Total Operating Expenses 1 318 . 515 1,58 0 352 26 1, 837 TOTAL BUDGET 7, 741 ,377 8, 785 ,318 ~ 1, 043 , 941 • rlelu des $50.446 A• anz re lm Dus r ement & ur.,sed compensation aue 10 11.ffilwr ·· D oes nolincklde S45,888 Appropnauon ~ ansfer ror healll> ins & err - did nol affecl cash 9
Recommend
More recommend