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~ ... o o CGM:mf 5/11/8 RES 0 L UTI 0 N No.S846 ORIGINAL MAY 1 8 1981 RESOLUTION REQUESTING BOARD OF DIRECTORS OF PUBLIC EMPLOYEES RETIREMENT SYSTEM TO INVESTIGATE ITS INVESTMENT POLICIES WHEREAS, the most recent Report to the Governor from the Board of Directors of the Public Employees Retirement System (PERS) dated January 12, 1981, reveals that the "Computed Rate of Return" on the entire $12.85 billion investment portfolio was 7.91 percent for the fiscal year ending June 30, 1980; and WHEREAS, the interest crediting rate which member employers and employees were granted on their accumulated retirement earnings for the year ending June 30, 1980 was only 6 percent; and WHEREAS, the interest crediting rate was increased by PERS Board of Administration to 6.75 percent effective July 1, 1980; and WHEREAS, Federal Treasury Notes, Federal T-Bills and short-term commercial paper have been yielding interest rates ranging from 12 percent to 20 percent over the past 18 months, depending upon the amount able to be invested; and WHEREAS, 49 percent of the PERS 12.85 billion investment portfolio as of June 30, 1980, is placed in bonds, many of which are in long-term investments yielding only 3 percent and 4 percent; and WHEREAS, only 4.1 percent of the PERS investment portfolio as of June 30, 1980 is placed in short-term investments, at a time when money market funds are earning up to 20 percent for large investments; and WHEREAS, public agency employers such as PERS member cities and counties are experiencing continuous employer rate increases, following periodic audits of the financial integrity of the PERS system; and WHEREAS, current PERS investment policy is unable to respond 8846