South Dakota Investment Council Investment Performance...

South Dakota Investment Council Investment Performance & FY 2019 Budget Request

Presented to LRC Executive Board August 28, 2017

Organization Chart Assets Investment Performance Cost Efficiency Compensation Overview Budget Funding Sources Long-Term Plan FY 2017 Year-End Budget Review FY 2019 Budget Request Trust Fund Summary Appendix

Organization Chart

1

LRC

Executive Board

South Dakota Investment Council

State Investment Officer

Matt Clark

General Counsel

Jeffrey Hallem

Asst Invest Officer Global Eq / Arbitrage

Brett Fligge

Sr. Portfolio Manager Global Equity Steve Schultz

Sr. Portfolio Manager Global Equity

Jan Zeeck

Portfolio Manager Global Equity Jeff Ellefson

Portfolio Manager

Global Equity Renae Randall

Assoc Portfolio Mgr Global Equity

Lee Mielke

Sr. Portfolio Manager Global Equity

Melissa H. Woidyla Sr. Portfolio Manager

Global Equity Candi Currier

Portfolio Manager Global Equity

Arianna Rehfeldt

Portfolio Manager Global Equity Randy Spinar

Research Analyst Equity/High Yield

Pending

Sr. Portfolio Manager Sm/Mid Cap Equity

Scott Hess

Portfolio Manager Sm/Mid Cap Equity

Jarrod Edelen

Portfolio Manager Sm/Mid Cap Equity

Darci Haug

Asst Invest Officer Fixed Income/Deriv

Tammy Otten

Sr. Portfolio Manager Fixed Income/HESP

Sherry Nelson

Assoc Portfolio Mgr High Yield Fixed Inc

Ross Sandine

Senior Investment Accountant

Cindy Pickering

Investment Accountant Sami Rains

Investment Accountant

Krystal Seeley

Investment Accountant

Brandy Eisma

CURRENT COUNCIL MEMBERS: Steve Kirby, Sioux Falls (Chair) Lorin Brass, Lennox (Vice Chair) Jeff Nelson, Wentworth Paul Bisson, Sturgis Ryan Brunner, S&PL Commissioner Rich Sattgast, State Treasurer Rob Wylie, SDRS Executive Director

Assoc Portfolio Mgr High Yield Fixed Inc

Danielle Mourer

Assoc Portfolio Mgr High Yield/Fixed Inc

Anne Cipperley

Asst Invest Officer Fixed Income/Alt Inv

Chris Nelson

Research Analyst Sm/Mid Cap Equity

Daniel Elmer

Research Analyst High Yield/Fixed Inc

Zachary Nipp


Matthew Carey

Research Analyst Equity/High Yield Makenzie Smook

Research Analyst High Yield/Fixed Inc

Lesyk Voznyuk

Business Manager

Laurie Riss

Asst Business Mgr/ Accountant

Christa Sites


Pending


Pending

(Research AnalystEquity/High YieldPending) (Research AnalystEquity/High YieldPending) (CURRENT COUNCIL MEMBERS:Steve Kirby, Sioux Falls (Chair)Lorin Brass, Lennox (Vice Chair)Jeff Nelson, WentworthPaul Bisson, SturgisRyan Brunner, S&PL CommissionerRich Sattgast, State TreasurerRob Wylie, SDRS Executive Director) (GeneralCounselJeffrey Hallem) (Asst Business Mgr/AccountantChrista Sites) (BusinessManagerLaurie Riss) (InvestmentAccountantBrandy Eisma) (InvestmentAccountantKrystal Seeley) (InvestmentAccountantSami Rains) (Senior InvestmentAccountantCindy Pickering) (Research AnalystEquity/High YieldMakenzie Smook) (Research AnalystEquity/High YieldMatthew Carey) (Research AnalystSm/Mid Cap EquityDaniel Elmer) (Portfolio ManagerSm/Mid Cap EquityDarci Haug) (Portfolio ManagerSm/Mid Cap EquityJarrod Edelen) (Sr. Portfolio ManagerSm/Mid Cap EquityScott Hess) (Sr. Portfolio ManagerFixed Income/HESPSherry Nelson) (Research AnalystHigh Yield/Fixed IncLesyk Voznyuk) (Research AnalystHigh Yield/Fixed IncZachary Nipp) (Assoc Portfolio MgrHigh Yield/Fixed IncAnne Cipperley) (Assoc Portfolio MgrHigh Yield Fixed IncDanielle Mourer) (Assoc Portfolio MgrHigh Yield Fixed IncRoss Sandine) (Research AnalystEquity/High YieldPending) (Assoc Portfolio MgrGlobal EquityLee Mielke) (Portfolio ManagerGlobal EquityRandy Spinar) (Portfolio ManagerGlobal EquityRenae Randall) (Portfolio ManagerGlobal EquityArianna Rehfeldt) (Portfolio ManagerGlobal EquityJeff Ellefson) (Sr. Portfolio ManagerGlobal EquityCandi Currier) (Sr. Portfolio ManagerGlobal EquityJan Zeeck) (Sr. Portfolio ManagerGlobal EquityMelissa H. Woidyla) ( Sr. Portfolio ManagerGlobal EquitySteve Schultz) (Asst Invest OfficerFixed Income/DerivTammy Otten) (Asst Invest OfficerGlobal Eq / ArbitrageBrett Fligge) (Asst Invest OfficerFixed Income/Alt InvChris Nelson) (State Investment OfficerMatt Clark) (LRCExecutive Board) (South Dakota Investment Council)

Assets

2

$133

$211

$260

$297

$337

$392

$449

$517

$561

$611 $7

91

$863 $1

,072

$1,2

98

$1,4

53

$1,5

92

$1,8

03

$1,8

79

$2,0

55

$2,2

83

$2,6

05

$2,7

23

$3,0

44 $3,5

29 $4,

144 $4

,872 $

5,53

4 $6,0

69

$6,1

11

$5,8

31 $6,3

18

$7,1

68 $7,

872 $8

,580

$10,

049

$9,1

60

$7,4

10

$8,3

04

$9,9

48

$9,9

03

$11,

312

$13,

049

$13,

289

$12,

954

$14,

207

FY 7

3

FY 7

4

FY 7

5

FY 7

6

FY 7

7

FY 7

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FY 7

9

FY 8

0

FY 8

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FY 8

8

FY 8

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FY 9

0

FY 9

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FY 9

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FY 9

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FY 9

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FY 9

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FY 9

8

FY 9

9

FY 0

0

FY 0

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FY 0

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FY 1

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FY 1

6

FY 1

7

South Dakota Retirement System* 11,631.8$ 81.9%Health Care Trust Fund 143.0 1.0%Education Enhancement Trust Fund 554.5 3.9%School & Public Lands Fund 286.4 2.0%Dakota Cement Trust Fund 316.5 2.2%South Dakota Cash Flow Fund 1,274.3 9.0%

14,206.5$ 100.0%

Fiscal Years 1973 to 2017$ in Millions

*For purposes of this exhibit, South Dakota Cement Plant Retirement Fund assets, prior to consolidation on 4/1/2014, are included with South Dakota Retirement System assets.

Investment performance Returns and earnings vs. benchmarks

3

Investment Performance Returns vs. Benchmarks (unaudited)

4 Years 10 Years Annualized Annualized FY 2017 FY 14 17 FY 08 17 SDRS Total Fund 13.81% 9.05% 6.47% Capital Market Benchmark 10.96% 8.18% 5.31% Added Value 2.85% .87% 1.16% State Fund Universe (est) 12.36% 8.30% 5.22% Added Value 1.45% .75% 1.25% Beginning FY 2017 SDRS Assets $10.502 billion Ending FY 2017 SDRS Assets $11.632 billion

4 Years10 Years

AnnualizedAnnualized

FY 2017FY 14 17FY 08 17

SDRS Total Fund13.81%9.05%6.47%

Capital Market Benchmark10.96%8.18%5.31%

Added Value2.85%.87%1.16%

State Fund Universe (est)12.36%8.30%5.22%

Added Value1.45%.75%1.25%

Beginning FY 2017 SDRS Assets$10.502 billion

Ending FY 2017 SDRS Assets$11.632 billion

Investment performance Returns and earnings vs. benchmarks

4

Investment Performance Earnings vs. Benchmarks (unaudited)

Total SDRS dollars earned Fiscal Year 2017 $1.465 million

Total SDRS dollars earned last 4 years $3.706 billion

Total SDRS dollars earned last 10 years $5.886 billion

Extra earnings resulting from last 1, 4 and 10 years of performance over benchmark (not including compounding):

1 year 4 years 10 years

o vs. Capital Markets Benchmark $299 million $370 million $1.033 billion

o vs. State Funds $153 million $323 million $1.092 billion

Total SDRS dollars earned Fiscal Year 2017$1.465 million

Total SDRS dollars earned last 4 years$3.706 billion

Total SDRS dollars earned last 10 years$5.886 billion

Extra earnings resulting from last 1, 4 and 10 years of performance

over benchmark (not including compounding):

1 year 4 years10 years

vs. Capital Markets Benchmark$299 million$370 million$1.033 billion

vs. State Funds$153 million$323 million$1.092 billion

Superior returns add up over time Cumulative returns for SDRS, Benchmark, Corporate plans, and other States

5

Gro

wth

of a

$

$0

$10

$20

$30

$40

$50

$60

$70

$80

1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017

Annualized Return44 years ended FY17

SDRS (10.4%)

Benchmark (9.4%)

Corp Plans (9.1%)

State Plan (9.0%)

6

Potential Excess Earnings

SDIC 44-year outperformance = .98% annualized vs. benchmark Outperformance of .5% next 20 years = extra $4.3 billion Underperformance of .5% = cost to retirement system of $3.9 billion.

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

2017 2020 2023 2026 2029 2032 2035 2038

Average + 0.50%

Average Returns

Average - 0.50%

Excess Earnings (In Millions)

Many pistons contribute Cumulative added value by source FY99 to FY17

7

0%

5%

10%

15%

20%

25%

30%

35%

40%

FY99 FY01 FY03 FY05 FY07 FY09 FY11 FY13 FY15 FY17

Asset Allocation

Private equity

Real estate

Arbitrage

Fixed Income

Global equity

Every asset category has good and bad years Annual added or detracted value by source

8

Asset Class FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Global equity 0.8% -0.1% 2.9% 1.9% 0.0% -0.4% 0.8% -0.3% -0.1% -6.2% 5.6% 2.1% -0.8% 1.1% 3.7% 0.3% 0.1% -0.4% 1.8%

Fixed Income -0.1% -0.1% -0.3% -0.6% 0.3% 0.0% 0.3% 0.1% 0.0% 0.2% -0.9% 0.6% 0.4% -0.3% 1.2% 0.1% 0.4% 0.9% 0.5%

Arbitrage 0.5% 0.7% 0.0% -0.1% 0.1% -0.1% -0.3% 0.3% -0.1% -0.2% 0.2% 0.1% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%

Real estate 1.0% 0.6% 0.5% 0.1% 0.0% 0.5% 2.1% 0.9% 3.0% -1.0% -7.0% 2.1% 2.3% -1.3% 0.6% 1.2% 1.1% -2.3% 1.6%

Private equity -0.3% 0.0% -0.2% 0.2% -0.2% 0.3% 0.7% 0.6% -0.1% 1.8% -1.8% 1.2% -0.2% -1.1% -0.8% 0.1% 0.5% 0.3% 0.0%

Asset Allocation -0.6% 0.0% -0.6% -0.6% -0.7% 0.8% 0.1% 0.8% 1.0% 1.0% 1.5% 1.4% 1.9% 1.5% 2.1% -0.3% 0.0% -1.1% -1.1%

Total 1.3% 1.1% 2.3% 1.0% -0.4% 1.1% 3.7% 2.4% 3.8% -4.5% -2.4% 7.6% 3.8% -0.1% 6.8% 1.4% 2.1% -2.6% 2.9%

Cost Efficiency

9

Difference between SDIC cost of .34% and benchmark cost of .68% is $48 million per year * SDIC projected expenses for FY 2019 using adjusted assets and expected average performance incentives ** Plus 20% profit participation after preferred return

SDIOInternal Cost

SDIO Internal &Outside Managers

$3 BillionMedianPensionFund

Benchmark (Similar Size and Asset Mix)

Median TargetDate MutualFunds

MedianAlternativeAsset Managers

0.34% *

0.57%

Management Fees

0.10% *

0.84%

1.50% **

0.68%

Compensation Overview

Long term results have significantly exceeded benchmarks Added 35% beyond benchmark to SDRS assets in the past 19 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 updated in 2013 Council target is 70% of cost of living adjusted median industry pay to balance getting a

good deal for South Dakota without losing the good deal if we cannot keep our people Incorporates performance incentives 2013 study showed compensation had fallen to 55%.

10

Compensation Overview, continued

Council changes implemented in 2014 to get back to target Expanded incentive compensation plan as opposed to adjusting base compensation Incentives expanded to include longer term and stretch incentives and expected to

average 80% (0% to 200%) Incentives aligned with the goal of adding value and only paid if add value

Compensation study updated in 2016 Indicated only modest slippage from target

Cost efficient due to internal management capabilities Securing team to preserve internal capabilities best chance to remain cost efficient Internal cost .1% with expected average incentives

11

12

Budget Funding Sources

Budget funded by assets under management 0% General Fund appropriation

Note: S&PL share of SDIC expenses paid from earnings of Cash Flow Fund

Trust Funds -9.9%

Retirement System -

88.6%

Cash Flow Fund - 1.5%

South Dakota Retirement System - 88.6%

Cash Flow Fund - 1.5%

Dakota Cement Trust - 2.5%

Education Enhancement Trust - 4.1%

Health Care Trust - 1.1%

School & Public Lands - 2.2%

Long Term Plan Executive Summary Projected LTP Budget

13

FY 2019 FY 2024 FY 2029

INVESTMENT OFFICE BUDGET

Personal Services Number of Employees 34.25 36.25 34.25 Base Compensation - Total Staff 5,717,652.94 7,649,141.62 9,398,134.75 Staff Attorney (1/4 FTE) & Interns 63,933.86 71,457.45 79,866.39 Investment Council 6,227.00 6,227.00 6,227.00 Flexibility funds-Retirements & Resignations 158,589.75 177,252.23 198,110.86 Investment Incentive Maximum 9,931,509.11 13,509,864.94 16,628,238.06 Benefits 2,465,406.91 3,261,696.79 3,973,552.98 Total Personal Services 18,343,319.57 24,675,640.02 30,284,130.05

Operating Expenses Contractual Services 1,860,368 2,012,565 2,221,791 Travel 85,000 95,003 106,182 Office Supplies & Postage 9,000 10,059 11,243 Capital Assets 40,520 52,118 58,867 Total Operating Expenses 1,994,888 2,169,745 2,398,083

Total Investment Council Budget 20,338,208 26,845,385 32,682,213

ASSET SUMMARY * Internal Assets 11,928,456,969 14,711,908,915 18,154,490,944 External Assets 3,463,100,410 4,271,199,362 5,270,658,661 Total Assets 15,391,557,380 18,983,108,277 23,425,149,605

EXPENSE SUMMARY

Internal Expenses 20,338,208 26,845,385 32,682,213 External Manager Fees 38,094,105 46,983,193 57,977,245 Total Expenses 58,432,312 73,828,578 90,659,458

UNIT COST SUMMARY **

Internal Expenses as % of Total Assets 0.095% 0.100% 0.098% Total Expenses as % of Total Assets 0.343% 0.348% 0.346%

* Projections based on long-term assumed returns applied to 6/30/17 assets. Updated each June 30.**Unit Cost Summary uses assumed average investment performance incentives

Note: FY 19 amounts differ from actual budget request. The LTP includes an assumed 2.25% salary policy

LTP

MAKE SURE PROMOTION INCREASES COINCIDE WITH PROMOTION SCHEDULE SPREADSHEETWhen copying fy29 info into into fy30 column, do not copy the promotion schedule rows

in Aug 2018 - ASK MATT IF HE WANTS TO ADD FULL-TIME STAFF ATTORNEY - WHAT YEAR? incr of 2 fte's for fy 22, 23 & 24, then back down - for transition years as sr staff retires

SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC SDIC

FY 2012FY 2013FY 2014FY 2015FY 2016FY 2017FY 2018FY 2019FY 2020FY 2021FY 2022FY 2023FY 2024FY 2025FY 2026FY 2027FY 2028FY 2029FY 2030FY 2031FY 2032FY 2033FY 2034FY 2035

EXECUTIVE SUMMARY


Personal Services

Number of Employees[28][28]303032.2532.2534.2534.2534.2534.2536.2536.2536.2534.2534.2534.2534.2534.25

Base Compensation - Total StaffERROR:#REF!ERROR:#REF!4,010,6574,401,9184,864,2545,150,9945,394,7375,717,6536,046,3606,377,2406,895,7847,261,4307,649,1427,493,1247,943,6518,379,6638,888,9919,398,135

Staff Attorney (1/4 FTE) & Interns22,06553,89162,52762,52763,93465,37266,84368,34769,88571,45773,06574,70976,39078,10979,866

Investment CouncilERROR:#REF!35,86335,5825,9466,0646,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,227

Flexibility funds-Retirements & Resignations140,431148,061151,022155,100155,100158,590162,158165,807169,537173,352177,252181,240185,318189,488193,751198,111

Investment Incentive MaximumERROR:#REF!ERROR:#REF!3,261,1247,323,9468,018,6458,921,5539,461,3269,931,50910,538,65111,158,54911,790,20312,803,31513,509,86514,259,73713,921,30014,795,05515,638,83216,628,238

Benefits1,085,3123,261,1241,240,9791,890,6182,073,0442,227,6492,355,3282,465,4072,601,4242,739,6562,923,6763,121,6963,261,6973,351,3273,374,6473,563,4233,758,3603,973,553

Total Personal ServicesERROR:#REF!ERROR:#REF!8,688,77313,792,55415,166,91916,524,04917,435,24418,343,32019,420,19220,514,32221,853,77323,435,90524,675,64025,364,72125,505,85327,010,24628,564,27030,284,130

Operating Expenses

Contractual - Investment Services839,713946,400869,924983,5601,012,6861,056,5211,121,6211,234,2611,223,9941,249,2841,275,1431,301,5841,328,6191,356,2631,384,5291,413,4311,442,9831,473,201

Contractual - Administrative Services787,147517,277564,891564,133583,206595,611604,502626,107637,166648,473663,274675,169683,945696,305708,944721,866735,079748,590

Travel65,70065,70085,00085,00085,00085,00085,00085,00086,91388,86895,22497,36795,00397,14099,326101,561103,846106,182

Office Supplies & Postage12,73312,73312,73312,73312,73312,73312,7339,0009,2039,41010,18710,41610,05910,28510,51710,75310,99511,243

Capital Assets28,24228,24248,50043,00047,19244,40040,52040,52047,29048,45349,64450,86652,11853,40254,71856,06757,45058,867

Total Operating Expenses1,733,5351,570,3521,581,0481,688,4261,740,8171,794,2651,864,3761,994,8882,004,5652,044,4882,093,4732,135,4022,169,7452,213,3962,258,0342,303,6782,350,3542,398,083

Total Investment Council BudgetERROR:#REF!ERROR:#REF!10,269,82115,480,97916,907,73618,318,31519,299,62020,338,20821,424,75722,558,81023,947,24625,571,30726,845,38527,578,11727,763,88629,313,92530,914,62432,682,213

ASSET SUMMARY

Internal Assets6,743,999,5238,042,846,2179,447,833,73610,076,032,5889,844,732,39710,970,266,92011,439,205,78711,928,456,96912,438,909,13512,971,490,12213,527,168,67114,106,956,24414,711,908,91515,343,129,34716,001,768,86016,689,029,59017,406,166,74218,154,490,944

External Assets3,159,083,4773,269,173,7793,601,660,3743,181,905,0283,108,862,8623,184,916,2023,321,059,7453,463,100,4103,611,296,2013,765,916,4873,927,242,5174,095,567,9424,271,199,3624,454,456,9074,645,674,8304,845,202,1395,053,403,2485,270,658,661

Total Retirement System Assets7,882,686,0009,130,716,36510,602,389,49610,748,012,45910,501,680,86411,613,500,00012,136,107,50012,682,232,33813,252,932,79313,849,314,76814,472,533,93315,123,797,96015,804,368,86816,515,565,46717,258,765,91318,035,410,37918,847,003,84619,695,119,019

Total Assets9,903,083,00011,312,019,99613,049,494,11013,257,937,61612,953,595,25914,155,183,12214,760,265,53115,391,557,38016,050,205,33616,737,406,60917,454,411,18918,202,524,18618,983,108,27719,797,586,25420,647,443,69021,534,231,72922,459,569,99023,425,149,605

EXPENSE SUMMARY

Internal ExpensesERROR:#REF!ERROR:#REF!10,269,82115,480,97916,907,73618,318,31519,299,62020,338,20821,424,75722,558,81023,947,24625,571,30726,845,38527,578,11727,763,88629,313,92530,914,62432,682,213

Assumed Budget Expenditures (40% avg Inv Perf Incnt)ERROR:#REF!ERROR:#REF!9,027,89810,480,18911,432,60612,226,67912,839,42713,556,97314,228,96614,939,75215,896,89616,829,20317,620,84917,841,56918,258,42319,211,86120,236,42921,328,452

External Manager Fees35,855,59736,941,66440,482,66335,000,95534,197,49135,034,07836,531,65738,094,10539,724,25841,425,08143,199,66845,051,24746,983,19348,999,02651,102,42353,297,22455,587,43657,977,245

Total ExpensesERROR:#REF!ERROR:#REF!50,752,48350,481,93451,105,22853,352,39355,831,27758,432,31261,149,01563,983,89167,146,91470,622,55473,828,57876,577,14378,866,30982,611,14886,502,06090,659,458

UNIT COST SUMMARY

Internal Expenses as % of Total AssetsERROR:#REF!ERROR:#REF!0.079%0.117%0.131%0.129%0.131%0.132%0.133%0.135%0.137%0.140%0.141%0.139%0.134%0.136%0.138%0.140%

Internal Exp as % of Total Assets (with assumed avg Inv Perf Incnt)ERROR:#REF!ERROR:#REF!0.069%0.079%0.088%0.086%0.087%0.088%0.089%0.089%0.091%0.092%0.093%0.090%0.088%0.089%0.090%0.091%

Total Expenses as % of Total AssetsERROR:#REF!ERROR:#REF!0.389%0.381%0.395%0.377%0.378%0.380%0.381%0.382%0.385%0.388%0.389%0.387%0.382%0.384%0.385%0.387%

Internal Exp as % of Adjusted Long-Term Value Total Assets0.088%0.088%0.093%0.094%0.095%0.096%0.096%0.098%0.100%0.100%0.097%0.096%0.096%0.097%0.098%

(with assumed avg Inv Perf Incentive)

PERSONAL SERVICES BUDGET

INVESTMENT OFFICER (SDIC recommended/Ex Brd approved)Matt368,938386,647405,206424,656440,793460,629460,629479,054498,216518,145538,870560,425582,842606,156630,402655,618681,843709,117

% INCREASE IN BASEERROR:#REF!4.80%4.80%4.80%3.80%4.50%0.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUMERROR:#REF!368,938386,647810,412849,312881,586921,257921,257958,107996,4321,036,2891,077,7411,120,8501,165,6841,212,3121,260,8041,311,2361,363,686

ASST INVESTMENT OFFICER ARBITRAGE/INT'LBrett233,092244,280256,006268,294278,489291,021291,021302,662314,769327,359340,454354,072368,235382,964398,283414,214430,783448,014


INVESTMENT INCENTIVE MAXIMUMERROR:#REF!233,092244,280512,012536,588556,979582,043582,043605,324629,537654,719680,908708,144736,470765,929796,566828,428861,565

ASST INVESTMENT OFFICER FIXED INC / DERIVATIVETammy199,430209,003219,035229,548238,271248,993248,993258,953269,311280,084291,287302,939315,056327,658340,765354,395368,571383,314



ASST INVESTMENT OFFICER FIXED INC / ALT INVChris198,918208,466218,472228,959237,660248,354248,354258,288268,620279,365290,539302,161314,247326,817339,890353,486367,625382,330



SENIOR PORTFOLIO MANAGER-GLOBAL EQScott*173,027181,332190,036199,158206,726216,029216,029222,942231,859241,134250,779260,810271,243282,092293,376305,111317,315330,008



SENIOR PORTFOLIO MANAGER-GLOBAL EQSteve*173,027181,332190,036199,158206,726216,029216,029222,942231,859241,134250,779260,810271,243282,092293,376305,111317,315330,008



SENIOR PORTFOLIO MANAGER FIXED INCOMESherry109,435114,688120,193131,972136,987143,151143,151148,877154,832161,026167,467174,166181,132188,377195,913203,749211,899220,375



SENIOR PORTFOLIO MANAGER/GLOBAL EQUITYJan171,675179,915188,551197,602205,111214,341214,341222,914231,831241,104250,748260,778271,209282,058293,340305,074317,277329,968

% INCREASE IN BASE5/94ERROR:#REF!4.80%4.80%4.80%3.80%4.50%0.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%


PORTFOLIO MANAGER - GLOBAL EQMelissa170,611178,800188,551197,602205,111214,341214,341222,915231,832241,105250,749260,779271,210282,059293,341305,075317,278329,969

% INCREASE IN BASE8/95ERROR:#REF!4.80%5.45%4.80%3.80%4.50%0.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%


PORTFOLIO MANAGER/GLOBAL EQUITYCandi166,304174,287184,744197,602205,111214,341214,341222,914231,831241,104250,748260,778271,209282,058293,340305,074317,277329,968343,166356,893371,169386,015401,456

% INCREASE IN BASE7/00ERROR:#REF!4.80%6.00%6.96%3.80%4.50%0.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUMERROR:#REF!166,304174,287369,488395,204410,221428,681428,681445,829463,662482,208501,496521,556542,419564,115586,680610,147634,553659,935686,333713,786742,337772,031

highlight-sr pf mgr

ASSOCIATE PORTFOLIO MANAGER - GLOBAL EQDarci132,003158,404175,305191,420200,991212,447212,447222,914231,831241,104250,748260,778271,209282,058293,340305,074317,277329,968343,166356,893371,169386,015401,456417,514

% INCREASE IN BASE4/01 fy01ERROR:#REF!20.00%10.67%9.19%5.00%5.70%0.00%4.93%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUMERROR:#REF!132,003158,404350,610382,839401,981424,894424,894445,829463,662482,208501,496521,556542,419564,115586,680610,147634,553659,935686,333713,786742,337772,031802,912

ASSOCIATE PORTFOLIO MANAGER - GLOBAL EQ Arianna103,584120,716144,860173,976190,798207,635211,788220,259229,070241,104250,748260,778271,209282,057293,339305,073317,276329,967343,165356,892371,168386,014401,455417,513



ASSOCIATE PORTFOLIO MANAGER - GLOBAL EQ Jeff

Riss, Laurie: Jarrod, Randy & Renae all read Jeff's line. Formula for increases on Jeff's base comp91,079108,693126,671151,813180,809199,414207,391217,760226,470235,529250,745260,774271,205282,053293,336305,069317,272329,963343,161356,888371,163386,010401,450417,508



ASSOCIATE PORTFOLIO MANAGER - SMALL/MID CAPJarrod91,079108,693126,671151,813180,809199,414207,391217,760226,470235,529250,745260,774271,205282,053293,336305,069317,272329,963343,161356,888371,163386,010401,450417,508



ASSOCIATE PORTFOLIO MANAGER - GLOBAL EQ Randy91,079108,693126,671151,813180,809199,414207,391217,760226,470235,529250,745260,774271,205282,053293,336305,069317,272329,963343,161356,888371,163386,010401,450417,508



ASSOCIATE PORTFOLIO MANAGER - GLOBAL EQ Renae91,079108,693126,671151,813180,809199,414207,391217,760226,470235,529250,745260,774271,205282,053293,336305,069317,272329,963343,161356,888371,163386,010401,450417,508



ASSOCIATE PORTFOLIO MANAGER - SMALL/MID CAPVacant91,079108,693126,671150,982174,782197,181201,800209,872218,267226,998236,077245,521255,341265,555276,177287,224298,713310,662323,088336,012349,452363,430377,968393,086

% INCREASE IN BASEERROR:#REF!19.34%16.54%19.19%15.76%12.82%2.34%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%4.00%


ASSOCIATE PORTFOLIO MGR - HIGH YLD/CONVERTIBLESRoss

Riss, Laurie: starting with Ross, use transition tables below73,85284,967102,198119,378137,929164,673181,140195,632209,326223,979239,657256,433271,205282,053293,335305,069317,271329,962343,161356,887371,163386,009401,450417,508



ASSISTANT PORTFOLIO MANAGER - GLOBAL EQUITYLee67,31570,93081,64793,320111,311129,490145,029165,333188,479203,558217,807233,053249,367266,823293,335305,068317,271329,962343,160356,887371,162386,009401,449417,507



ASSISTANT PORTFOLIO MGR-HIGH YIELD/CONVERTIBLESDanielle67,31570,93081,64793,320111,311129,490145,029165,333188,479203,558217,807233,053249,367266,823293,335305,068317,271329,962343,160356,887371,162386,009401,449417,507



highlight - sr pf mgr

RESEARCH ANALYST - HIGH YIELD/CONVERTIBLE ARBAnne58,32864,20773,93284,504100,796112,589118,444129,104148,469169,255192,951219,964239,760257,743277,073297,854317,413330,078343,281357,012371,293386,145401,590417,654



RESEARCH ANALYSTZachERROR:#REF!ERROR:#REF!53,00054,59060,59568,29078,67089,68397,755116,328129,124140,746153,413176,425201,124229,281261,381284,905306,273329,243353,937386,009401,449417,507

% INCREASE IN BASE09/14not hired until FY 15-so everything moved back one year11.00%12.70%15.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%9.06%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUMactual FY15FY 15 actual amt s/b 54,590 - adjusted in FY 16 request109,180121,190136,579157,339179,367195,510232,656258,249281,491306,825352,849402,248458,563522,761569,810612,546658,487707,873772,018802,899

RESEARCH ANALYSTLesykERROR:#REF!ERROR:#REF!53,00050,62055,68262,19767,29780,21891,44899,679118,618131,666143,516156,432179,897205,082233,794266,525290,512312,301335,723360,903401,449417,507434,207451,576469,639488,424507,961528,279

% INCREASE IN BASE06/15 fy16not hired until FY 15-so everything moved back one year10.00%11.70%8.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%11.23%4.00%4.00%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUM101,240111,364124,394134,594160,436182,897199,358237,236263,331287,031312,864359,794410,165467,588533,050581,025624,602671,447721,805802,898835,014868,414903,151939,277976,8481,015,922

RESEARCH ANALYSTDaniel50,62055,68262,19767,29780,21891,44899,679118,618131,666143,516156,432179,897205,082233,794266,525290,512312,301335,723360,903401,449417,507434,207451,576469,639488,424507,961528,279

% INCREASE IN BASE06/15 fy1610.00%11.70%8.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%11.23%4.00%4.00%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUM101,240111,364124,394134,594160,436182,897199,358237,236263,331287,031312,864359,794410,165467,588533,050581,025624,602671,447721,805802,898835,014868,414903,151939,277976,8481,015,922

RESEARCH ANALYSTMatthew

Riss, Laurie: 98% of Dan/Lesyk.Close the gap at some pointERROR:#REF!ERROR:#REF!53,00054,59160,95365,95178,61489,61997,685116,245129,032140,645153,303176,299200,981229,118261,195284,702306,055329,009353,685393,420409,157425,523442,544460,246478,656497,802517,714

% INCREASE IN BASE08/15 FY1611.65%8.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%11.23%4.00%4.00%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUM121,906131,902157,227179,239195,370232,491258,065281,291306,607352,598401,962458,236522,389569,404612,110658,018707,369786,840818,314851,046885,088920,492957,311995,604

RESEARCH ANALYSTMakenzie

Riss, Laurie: 96.2% of M. Carey's base comp - will need upward adjustment at some point to stay ahead of any new emplERROR:#REF!ERROR:#REF!53,00049,62858,63763,44575,62686,21493,973111,828124,129135,301147,478169,600193,344220,412251,269273,883294,425316,507340,245378,470393,609409,353425,727442,756460,467478,885498,041

% INCREASE IN BASE12/15 fy1618.15%8.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%11.23%4.00%4.00%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUM117,273126,890151,253172,428187,946223,656248,258270,602294,956339,199386,687440,823502,538547,767588,849633,013680,489756,940787,218818,706851,455885,513920,933957,771

RESEARCH ANALYSTnewERROR:#REF!ERROR:#REF!50,62052,13953,70355,31461,50969,01382,26493,781102,221121,643135,023147,175160,421184,484210,312239,756273,322297,921320,265344,285370,106434,207451,575469,638488,424507,961528,279

% INCREASE IN BASEFY 2018ERROR:#REF!ERROR:#REF!3.00%3.00%3.00%11.20%12.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%17.32%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUM[note - 50,285 start]123,018138,026164,527187,561204,442243,285270,047294,351320,843368,969420,625479,512546,644595,842640,530688,570740,212868,414903,151939,277976,8481,015,922

RESEARCH ANALYSTnewERROR:#REF!ERROR:#REF!50,62052,13953,70355,31461,50969,01382,26493,781102,221121,643135,023147,175160,421184,484210,312239,756273,322297,921320,265344,285370,106404,341420,515437,335454,829473,022491,943

% INCREASE IN BASEFY 2018ERROR:#REF!ERROR:#REF!3.00%3.00%3.00%11.20%12.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%9.25%4.00%4.00%4.00%4.00%4.00%

INVESTMENT INCENTIVE MAXIMUM123,018138,026164,527187,561204,442243,285270,047294,351320,843368,969420,625479,512546,644595,842640,530688,570740,212808,682841,029874,670909,657946,043

RESEARCH ANALYST *new*50,62052,54454,90854,90857,10459,38961,76464,23571,42980,14395,531108,905118,706141,261156,799170,911186,293214,237244,231278,423317,402345,968371,916399,810429,795469,551488,333

% INCREASE IN BASEFY 20223.80%4.50%0.00%4.00%4.00%4.00%4.00%11.20%12.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%9.25%4.00%

INVESTMENT INCENTIVE MAXIMUM142,858160,286191,061217,810237,413282,521313,599341,823372,587428,475488,461556,846634,804691,936743,832799,619859,591939,103

RESEARCH ANALYST *new*50,62052,54454,90854,90857,10459,38961,76464,23571,42980,14395,531108,905118,706141,261156,799170,911186,293214,237244,231278,423317,402345,968371,916399,810429,795469,551488,333

% INCREASE IN BASEFY 20223.80%4.50%4.00%4.00%4.00%4.00%11.20%12.20%19.20%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%9.25%4.00%

INVESTMENT INCENTIVE MAXIMUM142,858160,286191,061217,810237,413282,521313,599341,823372,587428,475488,461556,846634,804691,936743,832799,619859,591939,103

INVESTMENT ACCOUNTANTCindy70,75074,90077,89683,00085,49087,79887,79889,77391,79393,85995,97198,130100,338102,595104,904107,264109,678112,145


INVESTMENT ACCOUNTANTSami60,13863,66566,21272,21074,37676,38483,25887,62989,60191,61793,67895,78697,941100,145102,398104,702107,058109,467


INVESTMENT ACCOUNTANTKrystal53,07856,17558,42266,40068,39270,23970,94176,79482,36184,21486,10988,04790,02892,05394,12496,24298,408100,622


INVESTMENT ACCOUNTANTBrandy47,00049,37855,94562,25064,11861,54962,16564,80770,15475,24076,93378,66480,43482,24384,09485,98687,92189,899

% INCREASE IN BASEERROR:#REF!5.06%13.30%11.27%3.00%-4.01%1.00%4.25%8.25%7.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%

BUSINESS MANAGERLaurie59,96361,76263,61566,15967,48369,30569,30570,86472,45974,08975,75677,46179,20480,98682,80884,67186,57688,524


ASST BUSINESS MGR / ACCOUNTANTChrista30,02330,92431,85133,12533,78834,70144,10046,30547,34748,41249,50150,61551,75452,91954,10955,32756,57257,844


STAFF ATTORNEY (1/4 FTE)30,71038,51338,51339,38040,26641,17242,09843,04544,01445,00446,01747,05248,11149,193

% INCREASE IN BASE (incl 1/4 hlth & ret)

STUDENT INTERN19,88420,48121,42422,06523,18124,01424,01424,55425,10725,67226,24926,84027,44428,06128,69329,33829,99830,673


INVESTMENT COUNCIL7,8757,8755,7735,9466,0646,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,227

LONGEVITY PAY6,8257,5088,3859,4519,83110,46011,41512,15513,37114,70816,17817,79619,57621,53323,68726,05528,66131,527

Unused comp money - accountants FY 201788,55564,78972,4639,895

BASE SALARY - INVESTMENT POSITIONSERROR:#REF!ERROR:#REF!3,648,3304,009,3224,460,7764,730,6634,965,7555,269,3255,579,2755,895,1016,401,6576,754,9327,129,8686,960,6507,397,5287,819,4168,314,1198,808,107

BASE SALARY - ACCOUNTING, ADMINISTRATIVE & LONGEVITY336,804362,326392,596403,477420,331428,982448,328467,085482,138494,126506,498519,273532,474546,124560,247574,872590,028

TOTAL STAFF BASE SALARY34,584ERROR:#REF!4,010,6574,401,9184,864,2545,150,9945,394,7375,717,6536,046,3606,377,2406,895,7847,261,4307,649,1427,493,1247,943,6518,379,6638,888,9919,398,135

STAFF ATTORNEY (1/4 FTE) & INTERNS22,06553,89162,52762,52763,93465,37266,84368,34769,88571,45773,06574,70976,39078,10979,866

INVESTMENT COUNCILERROR:#REF!35,86335,5825,9466,0646,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,2276,227

FLEXIBILITY FUND-RETIREMENTS & RESIGNATIONS140,431140,431148,061151,022155,100155,100158,590162,158165,807169,537173,352177,252181,240185,318189,488193,751198,111

TOTAL INVESTMENT INCENTIVE MAXIMUM1,085,3123,261,1243,261,1247,323,9468,018,6458,921,5539,461,3269,931,50910,538,65111,158,54911,790,20312,803,31513,509,86514,259,73713,921,30014,795,05515,638,83216,628,238

PERSONAL BENEFITSERROR:#REF!ERROR:#REF!1,240,9791,890,6182,073,0442,227,6492,355,3282,465,4072,601,4242,739,6562,923,6763,121,6963,261,6973,351,3273,374,6473,563,4233,758,3603,973,553

TOTAL PERSONAL SERVICESERROR:#REF!8,688,77313,792,55415,166,91916,524,04917,435,24418,343,32019,420,19220,514,32221,853,77323,435,90524,675,64025,364,72125,505,85327,010,24628,564,27030,284,130

% INCREASE IN PERSONAL SERVICESERROR:#REF!ERROR:#REF!58.74%9.96%8.95%5.51%5.21%5.87%5.63%6.53%7.24%5.29%2.79%0.56%5.90%5.75%6.02%

*assume upper level retirements in '22 - 2 plateaued positions promoted to higher level - entry level hired

STAFF ATTORNEY (1/4 FTE)37,50038,62539,78440,97742,20743,47344,77746,12047,50448,92950,39751,90953,46655,070

Must cover with health ins the first year as part time - costless $10,980 forno ins provided

to SDIC of $8,622 fte cost. Retiree cost w/b 10,980health insurance

26.500 cash

STATE SALARY POLICY2.0%2.7%0.00%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%

LTP SALARY INCREASES - INVESTMENT POSITIONS1.8%1.8%0.0%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%

TRANSITION INCREASES - Inv Positions - New Hires in FY:

2006 (RS)10.00%4.00%3.00%3.00%3.00%3.00%1.75%

2008 )LM & DM)12.00%10.00%10.00%4.00%3.00%3.00%3.00%3.00%6.00%

2010 (AC)7.2%5.2%5.0%11.0%10.0%10.0%10.0%5.0%3.5%3.5%3.5%2.6%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%

2015 (ZN)7.2%8.2%15.2%10.0%5.0%15.0%7.0%5.0%5.0%11.0%10.0%10.0%10.0%5.0%3.5%3.5%3.5%5.25%0.0%

2016 (DE & LV) & (MC & MS)7.2%8.2%15.2%10.0%5.0%15.0%7.0%5.0%5.0%11.0%10.0%10.0%10.0%5.0%3.5%3.5%3.5%5.25%0.0%

20187.2%8.2%15.2%10.0%5.0%15.0%7.0%5.0%5.0%11.0%10.0%10.0%10.0%5.0%3.5%3.5%3.5%5.25%0.0%

20227.2%8.2%15.2%10.0%5.0%15.0%7.0%5.0%5.0%11.0%10.0%10.0%10.0%5.0%3.5%3.5%3.5%5.25%0.0%

PROGRESSION SCHEDULE - Guide

RESEARCH ANALYST- 3 YEARS

ASSISTANT PORTFOLIO MANAGER - YEARS 4 & 5

ASSOCIATE PORTFOLIO MGR - YEARS 5 THROUGH 10

PORTFOLIO MANAGER - YEARS 11 THROUGH 15

SENIOR PORTFOLIO MANAGER - YEARS 16+

INCENTIVE SCHEDULE - IMPLMENTATION

PERCENT OF 1YR AGO BASE INV. INCENTIVE MAX :

INVESTMENT OFFICERmc100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

ASSISTANT INVESTMENT OFFICERSbf, to, cn100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

SENIOR PORTFOLIO MANAGERSsh, ss100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

PORTFOLIO MANAGER-FIXED INCOME/HESPsn50%50%50%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%

PORTFOLIO MANAGERSjz, mhw, cc100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

ASSISTANT PORTFOLIO MANAGER (new FY2002)dh100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (New FY2003)ar100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired FY2004)je je rs df rr100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired FY2006)as. rs100%100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired May 2007)lm, ds70%90%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired May 2009)ad30%50%70%180%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired FY 2015)zn60%100%140%180%200%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired May 2015)lv de60%100%140%180%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired FY 2016)??60%100%140%180%200%200%200%200%200%200%200%200%

RESEARCH ANALYSTS - (Newly hired FY 2018)??60%100%140%180%200%200%200%200%200%200%

INCENTIVE SCHEDULE - BUDGETED

PERCENT OF 1YR AGO BASE INV. INCENTIVE MAX :100%100%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%200%

All incentive programs budgeted at 200% level

NUMBER OF EMPLOYEES (re health benefits)2828303032.0032.0034.0034.0034.0034.0036.0036.0034.0034.0034.0034.0034.0034.00

BENEFITS - Base Compensation

Social Security 7.65%320,280348,528388,255411,176429,822454,900480,429506,133546,202574,583604,662593,155628,058661,860701,281740,699

Retirement6%240,639264,115291,855309,060323,684343,059362,782382,634413,747435,686458,948449,587476,619502,780533,339563,888

Unemployment Insurance0.10%4,1874,5565,0755,3755,6195,9466,2806,6167,1407,5117,9047,7548,2108,6529,1679,682

Workers Compensation0.05%2,0932,2782,5382,6872,8092,9733,1403,3083,5703,7553,9523,8774,1054,3264,5844,841

Health/Life Insurance258,660254,100271,040275,904287,731287,980294,460301,085325,969333,303321,869329,111336,516344,087351,829359,746

Total Benefits - Base825,860873,577958,7631,004,2021,049,6651,094,8591,147,0901,199,7761,296,6271,354,8391,397,3351,383,4841,453,5081,521,7051,600,2011,678,856

Health Insurance per FTE8470.008,6228,4708,4708,6228,4708,4708,6618,8559,0559,2589,4679,6809,89810,12010,34810,581

2.25%

BENEFITS - Performance Incentive

Social Security 7.65%249,476560,282613,426682,499723,791759,760806,207853,629901,951979,4541,033,5051,090,8701,064,9791,131,8221,196,3711,272,060

Retirement6%195,667439,437481,119535,293567,680595,891632,319669,513707,412768,199810,592855,584835,278887,703938,330997,694

Unemployment Insurance0.10%3,2617,3248,0198,9229,4619,93210,53911,15911,79012,80313,51014,26013,92114,79515,63916,628

Workers Compensation0.05%1,6313,6624,0094,4614,7314,9665,2695,5795,8956,4026,7557,1306,9617,3987,8198,314

Total Benefits - Incentives450,0351,010,7051,106,5731,231,1741,305,6631,370,5481,454,3341,539,8801,627,0481,766,8571,864,3611,967,8441,921,1392,041,7182,158,1592,294,697

TOTAL BENEFITS1,275,8951,884,2822,065,3362,235,3762,355,3282,465,4072,601,4242,739,6562,923,6763,121,6963,261,6973,351,3273,374,6473,563,4233,758,3603,973,553

OPERATING EXPENSE BUDGET

Contractual - Investment Services

CONSULTING SERVICES

Consulting/Comp Analysis/Asset Allocation/etc.30,00030,00030,00030,00030,00030,00030,00030,00030,67531,36532,07132,79233,53034,28535,05635,84536,65137,476

Consultant - Legal/Executive Search Firm000000050,000100,000100,000100,000100,000100,000100,000100,000100,000100,000100,000

SUBTOTAL30,00030,00030,00030,00030,00030,00030,00080,000130,675131,365132,071132,792133,530134,285135,056135,845136,651137,476

INVESTMENT ACCOUNTING, PERFORMANCE, BENCHMARKING

BNY/Mellon Performance & Risk Analysis20,00020,00020,00020,00010,00010,0008,0008,0008,1808,3648,5528,7458,9419,1439,3489,5599,7749,994

S&P 120012,00012,00012,00012,00012,00012,00013,00015,00015,33815,68316,03516,39616,76517,14217,52817,92218,32618,738

S&P 100002,0002,0002,0002,0002,0002,0002,0002,0452,0912,1382,1862,2352,2862,3372,3902,4432,498

S&P U.S.10,00010,00010,00010,00010,00010,00011,00011,00011,24811,50111,75912,02412,29412,57112,85413,14313,43913,741

Citi Index085,00085,000010,00014,10014,41714,74215,07315,41215,75916,11416,47616,84717,22617,614

Portia50,00050,00050,00062,00062,00062,00062,00063,00064,41865,86767,34968,86470,41471,99873,61875,27476,96878,700

SUBTOTAL92,00094,00094,000191,000181,00096,000106,000113,100115,645118,247120,907123,628126,409129,254132,162135,135138,176141,285

INVESTMENT DATABASES, NEWSFEEDS & QUOTE FEES

Bloomberg146,475132,111110,502112,800122,311124,362124,362124,362127,160130,021132,947135,938138,997142,124145,322148,592151,935155,353

Factset181,632188,022188,022205,700215,985235,180257,264257,264263,052268,971275,023281,211287,538294,008300,623307,387314,303321,375

Reuters Fundamental Index25,46226,63028,58028,58045,36047,62847,62847,62848,70049,79550,91652,06153,23354,43055,65556,90758,18859,497

Quote Fees (incl Bloomberg/Factstet, NYSE, Sedol, Cusip, OPRA)54,08645,12545,12545,12545,12557,18267,18272,18273,80675,46777,16578,90180,67682,49184,34786,24588,18690,170

Dow Jones News Services34,80442,98442,98442,98442,98442,98451,00052,20053,37554,57555,80357,05958,34359,65560,99862,37063,77465,208

SUBTOTAL442,459434,872415,213435,189471,765507,336547,436553,636566,093578,830591,854605,170618,787632,709646,945661,502676,385691,604

INVESTMENT RESEARCH SERVICES

KDP High Yield20,00020,00020,00020,00020,00020,00020,00000000000000

Stone McCarthy4,3054,3054,305000000000000000

GNA - Gimme Credit25,00025,00025,00025,00025,00025,00025,00025,00025,56326,13826,72627,32727,94228,57129,21329,87130,54331,230

Credit Sights39,90047,25066,95077,50079,82582,22082,22086,00087,93589,91491,93794,00596,12098,283100,494102,755105,067107,431

Reorg Research85,000

Indie Research - Insider Score14,00017,64026,52526,52526,52526,52526,52526,52527,12227,73228,35628,99429,64630,31330,99531,69332,40633,135

Boyars Intrinsic Value30,00030,00000015,00015,00015,00015,33815,68316,03516,39616,76517,14217,52817,92218,32618,738

Rystad Energy45,00000000000000

Morningstar Equity44,00075,00075,00075,00075,00080,00080,00080,00081,80083,64185,52287,44789,41491,42693,48395,58697,73799,936

S&P Capital IQ13,26014,23315,69215,69215,69239,69039,69065,00066,46367,95869,48771,05072,64974,28475,95577,66479,41181,198

Value Line04,1004,1004,5154,7404,7504,7505,0005,1135,2285,3455,4655,5885,7145,8435,9746,1096,246

Management CV18,00000000000000000000

Flexibility - from Brokerage to Independent Research66,789150,00083,13983,13983,139130,000100,000100,000102,250104,551106,903109,308111,768114,283116,854119,483122,171124,920

SUBTOTAL275,254387,528330,711327,371329,921423,185438,185487,525411,582420,842430,311439,993449,893460,016470,366480,949491,771502,836

TOTAL CONTRACTUAL-INVESTMENT839,713946,400869,924983,5601,012,6861,056,5211,121,6211,234,2611,223,9941,249,2841,275,1431,301,5841,328,6191,356,2631,384,5291,413,4311,442,9831,473,201

Contractual - Administrative Expenses

Office Rent101,542101,542129,125115,148120,554125,069125,069134,609134,609134,609134,609134,609134,609134,609134,609134,609134,609134,609

Bond/Liability Insurance7,0207,0207,4107,4107,8007,8007,8008,1908,3748,5638,7558,9529,1549,3609,5709,78610,00610,231

Telephone10,00010,00010,00010,00012,00014,00018,00018,00018,40518,81920,37420,83320,11820,57121,03421,50721,99122,486

Office Equip Rental / Maintenance6,0006,0006,0006,0006,0006,0566,0006,0006,1356,2736,4146,5586,7066,8577,0117,1697,3307,495

Bureau of Information & Telecomm (BIT)40,00042,63943,33548,02856,23261,45465,30069,00070,55372,14073,76375,42377,12078,85580,62982,44384,29886,195

State Central Services9,0008,7418,3519,51311,08611,69812,79912,79913,08713,38113,68313,99014,30514,62714,95615,29315,63715,989

Legislative Audit37,13537,13555,70050,00051,50051,50051,50051,50052,65953,84455,05556,29457,56058,85660,18061,53462,91864,334

Attorney General's Office16,00017,97018,50918,50918,50918,50918,50918,92519,35119,78720,23220,68721,15321,62822,11522,61323,122

Custodial Fees - Global538,750250,500250,500263,025263,025263,025263,025271,000277,098283,332289,707296,226302,891309,706316,674323,799331,085338,534

Seminars / Educational Programs33,50033,50033,50033,50033,50033,50033,50033,50034,25435,02437,91938,77237,44238,28539,14640,02740,92741,848

Business Publications4,2004,2003,0003,0003,0003,0003,0003,0003,0683,1373,2073,2793,3533,4283,5063,5843,6653,748

TOTAL CONTRACTUAL-ADMINISTRATIVE787,147517,277564,891564,133583,206595,611604,502626,107637,166648,473663,274675,169683,945696,305708,944721,866735,079748,590

CONTRACTUAL TOTAL1,626,8601,463,6771,434,8151,547,6931,595,8921,652,1321,726,1231,860,3681,861,1601,897,7571,938,4171,976,7532,012,5652,052,5692,093,4732,135,2972,178,0632,221,791

OFFICE SUPPLIES AND POSTAGE12,73312,73312,73312,73312,73312,73312,7339,0009,2039,41010,18710,41610,05910,28510,51710,75310,99511,243

CAPITAL ASSETS

Computer Hardware17,44617,44615,73715,73714,86115,49510,75010,75016,85017,32817,81918,32518,84519,38019,93120,49721,07921,678

Office Equipment & Books5,0405,0407,7632,2632,3313,9054,7704,7704,8774,9875,0995,2145,3315,4515,5745,6995,8285,959

Furniture and Fixtures Acquisition5,7565,75625,00025,00030,00025,00025,00025,00025,56326,13826,72627,32727,94228,57129,21329,87130,54331,230

TOTAL28,24228,24248,50043,00047,19244,40040,52040,52047,29048,45349,64450,86652,11853,40254,71856,06757,45058,867

TRAVEL

Council Meeting Travel8,0708,0708,0708,0708,0708,0708,0708,0708,2528,4379,1359,3409,0209,2239,4309,6429,85910,081

International Travel15,15515,15515,72015,72015,72015,72015,72015,72016,07416,43516,80517,18317,57017,96518,36918,78319,20519,637

State Travel2,4752,4752,4752,4752,4752,4752,4752,4752,5312,5882,8012,8652,7662,8282,8922,9573,0243,092

Seminar and Educational Travel40,00040,00058,73558,73558,73558,73558,73558,73560,05761,40866,48367,97965,64767,12468,63470,17871,75773,372

TOTAL65,70065,70085,00085,00085,00085,00085,00085,00086,91388,86895,22497,36795,00397,14099,326101,561103,846106,182

TOTAL OPERATING EXPENSES1,733,5351,570,3521,581,0481,688,4261,740,8171,794,2651,864,3761,994,8882,004,5652,044,4882,093,4732,135,4022,169,7452,213,3962,258,0342,303,6782,350,3542,398,083

% INCREASE IN OPERATING EXPENSESERROR:#REF!-9.41%0.04%6.79%3.10%3.07%3.91%7.00%0.49%1.99%2.40%2.00%1.61%2.01%2.02%2.02%2.03%2.03%

TOTAL INTERNAL EXPENSESERROR:#REF!8,785,31810,269,82115,480,97916,907,73618,318,31519,299,62020,338,20821,424,75722,558,81023,947,24625,571,30726,845,38527,578,11727,763,88629,313,92530,914,62432,682,213

% INCREASE IN TOTAL INTERNAL EXPENSESERROR:#REF!ERROR:#REF!16.90%50.74%9.22%8.34%5.36%5.38%5.34%5.29%6.15%6.78%4.98%2.73%0.67%5.58%5.46%5.72%

COMPUTER ACQUISITION AND RETIREMENT SCHEDULE

ADDED992547777777777777

SCRAPPED OR RETIRED TO LOW END DUTY990537777777777777

ENDING NUMBER293030303235353737373737373737373737

COMPUTER HARDWARE/SOFTWARE PURCHASES

COMPUTERSERROR:#REF!ERROR:#REF!3,98410,2608,45412,03412,39512,76713,15013,54413,95114,36914,80015,24415,70216,17316,65817,158

PRINTERS, PROJECTORS, MISCERROR:#REF!ERROR:#REF!2,2532,3202,3902,4612,5172,5732,6312,6912,7512,8132,8762,9413,0073,0753,1443,215

NETWORK SERVER, SOFTWARE, WIRING,CARDSERROR:#REF!ERROR:#REF!3,7873,9014,0181,0001,0231,0461,0691,0931,1181,1431,1691,1951,2221,2491,2771,306

TOTALERROR:#REF!ERROR:#REF!10,02416,48014,86115,49515,93416,38616,85017,32817,81918,32518,84519,38019,93120,49721,07921,678

EXTERNAL FEES (Retirement Systems)

TOTAL EXTERNAL MANAGER FEES (Ret Systems)

Riss, Laurie: See Matt's pink note in Ext Mgr file for justification on 1.1%

35,855,59736,941,66440,482,66335,000,95534,197,49135,034,07836,531,65738,094,10539,724,25841,425,08143,199,66845,051,24746,983,19348,999,02651,102,42353,297,22455,587,43657,977,245

FEES AS % OF EXTERNAL ASSETS1.14%1.13%1.12%

icsf10101: see Matt's pink note in mgmt fees folder to justify using 110bp going forward - see note under external assets for further expl

1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%1.10%

EXTERNAL MANAGER FEES BASED ON ADJUSTED EXT ASSETS36,434,39636,225,98934,197,49132,406,52233,791,78335,237,04736,744,93938,318,20039,959,69341,672,40443,459,45445,324,09947,269,74149,299,93251,418,37853,628,952

ASSET SUMMARY

YEAR END ASSETS

INTERNAL ASSETS6,743,999,5238,042,846,2179,447,833,73610,076,032,5889,844,732,39710,970,266,92011,439,205,78711,928,456,96912,438,909,13512,971,490,12213,527,168,67114,106,956,24414,711,908,91515,343,129,34716,001,768,86016,689,029,59017,406,166,74218,154,490,944

EXTERNAL ASSETS

Riss, Laurie: Total fees & ext mgmt weight - get from Tammy. May then need to adjust fee percentage for ext mgrs and weight percentage going forwardPer Matt - drop percentage of ext managed assets by 1% each year until 28%3,159,083,4773,269,173,7793,601,660,3743,181,905,0283,108,862,8623,184,916,2023,321,059,7453,463,100,4103,611,296,2013,765,916,4873,927,242,5174,095,567,9424,271,199,3624,454,456,9074,645,674,8304,845,202,1395,053,403,2485,270,658,661

TOTAL ASSETS9,903,083,00011,312,019,99613,049,494,11013,257,937,61612,953,595,25914,155,183,12214,760,265,53115,391,557,38016,050,205,33616,737,406,60917,454,411,18918,202,524,18618,983,108,27719,797,586,25420,647,443,69021,534,231,72922,459,569,99023,425,149,605

TOTAL RETIREMENT SYSTEMS ASSETS - FY END7,882,686,0009,130,716,36510,602,389,49610,748,012,45910,501,680,86411,613,500,00012,136,107,50012,682,232,33813,252,932,79313,849,314,76814,472,533,93315,123,797,96015,804,368,86816,515,565,46717,258,765,91318,035,410,37918,847,003,84619,695,119,019

ADJUSTED LONG-TERM VALUE ASSETS

Riss, Laurie: Per Matt - changed haircut to zero on assets for FY 16 year ending assets because using depressed return assumptions already. For FY17 year ending assets, haircut assets by 7.5%haircut 7.5%

INTERNAL ASSETS8,503,050,3628,638,872,1519,844,732,39710,147,496,90110,581,265,35311,033,822,69711,505,990,95011,998,628,36312,512,631,02113,048,934,52613,608,515,74614,192,394,64614,801,636,19515,437,352,37116,100,704,23616,792,904,123

EXTERNAL ASSETS3,241,494,3373,293,271,7043,108,862,8622,946,047,4873,071,980,2643,203,367,8803,340,448,9863,483,472,7503,632,699,3293,788,400,3463,950,859,4104,120,372,6394,297,249,2184,481,811,9794,674,398,0044,875,359,262

TOTAL ADJUSTED ASSETS11,744,544,69911,932,143,85412,953,595,25913,093,544,38813,653,245,61614,237,190,57614,846,439,93615,482,101,11316,145,330,34916,837,334,87217,559,375,15718,312,767,28519,098,885,41319,919,164,34920,775,102,24021,668,263,385

AVERAGE ASSETS

INTERNAL ASSETS - AVG7,393,422,8708,745,339,9769,761,933,1629,960,382,49310,407,499,65811,204,736,35311,683,831,37812,183,683,05212,705,199,62913,249,329,39613,817,062,45814,409,432,58015,027,519,13115,672,449,10316,345,399,22517,047,598,16617,780,328,843

EXTERNAL ASSETS - AVG3,214,128,6283,435,417,0773,391,782,7013,145,383,9453,146,889,5323,252,987,9733,392,080,0783,537,198,3063,688,606,3443,846,579,5024,011,405,2304,183,383,6524,362,828,1354,550,065,8694,745,438,4854,949,302,6935,162,030,954

TOTAL ASSETS - AVG10,607,551,49812,180,757,05313,153,715,86313,105,766,43813,554,389,19114,457,724,32715,075,911,45615,720,881,35816,393,805,97217,095,908,89917,828,467,68818,592,816,23219,390,347,26620,222,514,97221,090,837,71021,996,900,85922,942,359,797

EXT ASSETS AS % OF TOTAL ASSETS31.9%28.9%27.6%24.0%24.0%22.5%22.5%22.5%22.5%22.5%22.5%22.5%22.5%22.5%22.5%22.5%22.5%22.5%

ASSET GROWTH SUMMARY

TOTAL ASSETSERROR:#REF!14.23%15.36%1.60%-2.30%9.28%4.27%4.28%4.28%4.28%4.28%4.29%4.29%4.29%4.29%4.29%4.30%4.30%

TOTAL RETIREMENT SYSTEMSERROR:#REF!15.83%16.12%1.37%-2.29%10.59%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%

EXPENSE SUMMARY

INTERNAL EXPENSES - BUDGETERROR:#REF!8,785,31810,269,82115,480,97916,907,73618,318,31519,299,62020,338,20821,424,75722,558,81023,947,24625,571,30726,845,38527,578,11727,763,88629,313,92530,914,62432,682,213

INTERNAL EXPENSES (with assumed 80% avg Inv Perf Incnt)

Riss, Laurie: 40% of incentive maximum of 200% --(leaves 60% of max inc unspent

ERROR:#REF!7,741,3779,027,898

Riss, Laurie: actual budget spent10,480,18911,432,60612,226,67912,839,42713,556,97314,228,96614,939,75215,896,89616,829,20317,620,84917,841,56918,258,42319,211,86120,236,42921,328,452

EXTERNAL MANAGER FEES35,855,59736,941,66440,482,66335,000,95534,197,49135,034,07836,531,65738,094,10539,724,25841,425,08143,199,66845,051,24746,983,19348,999,02651,102,42353,297,22455,587,43657,977,245

TOTAL EXPENSESERROR:#REF!45,726,98249,510,56145,481,14445,630,09747,260,75749,371,08451,651,07853,953,22456,364,83459,096,56361,880,45164,604,04266,840,59569,360,84672,509,08475,823,86579,305,697

TOTAL EXPENSES based on adjusted external assets45,462,29446,706,17745,630,09744,633,20146,631,21048,794,02050,973,90553,257,95355,856,58858,501,60761,080,30363,165,66865,528,16468,511,79371,654,80774,957,404

(with assumed 80% avg inv perf incentive

UNIT COST SUMMARY (using average assets)

INTERNAL EXPENSES AS % OF INTERNAL ASSETSERROR:#REF!0.119%0.117%0.159%0.170%0.176%0.172%0.174%0.176%0.178%0.181%0.185%0.186%0.184%0.177%0.179%0.181%0.184%

INTERNAL EXPENSES AS % OF TOTAL ASSETSERROR:#REF!0.083%0.084%0.118%0.129%0.135%0.133%0.135%0.136%0.138%0.140%0.143%0.144%0.142%0.137%0.139%0.141%0.142%

INTERNAL EXPENSES AS % OF TOTAL ASSETS (with 40% avg Inv Perf Incnt)ERROR:#REF!0.073%0.074%

Riss, Laurie: incl. actual budget expenditures

0.080%

Riss, Laurie: Includes actual budget expenditures0.087%0.090%0.089%0.090%0.091%0.091%0.093%0.094%0.095%0.092%0.090%0.091%0.092%0.093%

TOTAL EXPENSES AS % OF TOTAL ASSETS (with avg incnt)ERROR:#REF!0.431%0.406%0.346%0.348%0.349%0.341%0.343%0.343%0.344%0.346%0.347%0.347%0.345%0.343%0.344%0.345%0.346%

UNIT COST SUMMARY (using Adjusted Assets)

INTERNAL EXPENSES AS % OF TOTAL ASSETS (with assumed avg incentives)0.088%0.088%0.093%0.094%0.095%0.096%0.096%0.098%0.100%0.100%0.097%0.096%0.096%0.097%0.098%

TOTAL EXPENSES AS % OF TOTAL ASSETS (with assumed avg incentives)0.391%0.352%0.341%0.342%0.343%0.343%0.344%0.346%0.347%0.348%0.345%0.343%0.344%0.345%0.346%

ASSET GROWTH RATES

SDRS CONVENTIONAL (assume 6.5% plus .5% premium6.25%6.25%5.25%5.25%5.25%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%4.50%

with -2.5% net contrib

CEMENT PLANT RETIREMENT FUND0.00%4.50%4.50%

(assume 4.5% return 4 yrs, then 6.75% return with -8.5% net contrib)

DAKOTA CEMENT TRUST (7% less distribution of 4%)2.50%2.30%2.30%2.58%2.58%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%

HEALTH CARE TRUST (7% - 4% dist)3.50%2.30%2.30%2.58%2.58%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%

EDUCATION ENHANCEMENT TRUST (7% - 4% dist)3.10%2.10%2.10%2.50%2.50%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%

SCHOOL AND PUBLIC LANDS FUND (7% less distribution of 4%)3.50%2.30%2.30%2.58%2.58%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%

SOUTH DAKOTA CASH FLOW FUND0.00%0.00%0.00%0.00%0.00%3.50%3.50%3.50%3.50%3.50%3.50%3.50%3.50%3.50%3.50%3.50%3.50%3.50%

TOTAL ASSETSfinal assetsassets 3/31/17

TOTAL SD RETIREMENT SYSTEM7,835,186,0009,076,535,48310,602,389,49610,748,012,45910,501,680,86411,613,500,00012,136,107,50012,682,232,33813,252,932,79313,849,314,76814,472,533,93315,123,797,96015,804,368,86816,515,565,46717,258,765,91318,035,410,37918,847,003,84619,695,119,019

TOTAL CEMENT PLANT RETIREMENT FUND47,500,00054,180,8820000000000000000

TOTAL DAKOTA CEMENT TRUST236,725,000268,843,121302,362,265304,669,127294,571,755315,600,000325,068,000334,820,040344,864,641355,210,580365,866,898376,842,905388,148,192399,792,638411,786,417424,140,009436,864,210449,970,136

TOTAL HEALTH CARE TRUST106,790,000121,106,711136,016,642137,183,496133,161,442142,600,000146,878,000151,284,340155,822,870160,497,556165,312,483170,271,857175,380,013180,641,414186,060,656191,642,476197,391,750203,313,502

TOTAL EDUCATION ENHANCEMENT TRUST386,855,000441,011,625503,354,908513,013,957507,946,208553,000,000569,590,000586,677,700604,278,031622,406,372641,078,563660,310,920680,120,248700,523,855721,539,571743,185,758765,481,331788,445,770

TOTAL SCHOOL & PUBLIC LANDS188,365,000222,342,174256,694,476263,348,658259,767,962285,600,000294,168,000302,993,040312,082,831321,445,316331,088,676341,021,336351,251,976361,789,535372,643,221383,822,518395,337,193407,197,309

TOTAL CASH FLOW FUND1,101,662,0001,128,000,0001,248,676,3231,291,709,9191,256,467,0281,244,883,1221,288,454,0311,333,549,9221,380,224,1701,428,532,0161,478,530,6361,530,279,2081,583,838,9811,639,273,3451,696,647,9121,756,030,5891,817,491,6601,881,103,868

TOTAL SDIC ASSETS9,903,083,00011,312,019,99613,049,494,11013,257,937,61612,953,595,25914,155,183,12214,760,265,53115,391,557,38016,050,205,33616,737,406,60917,454,411,18918,202,524,18618,983,108,27719,797,586,25420,647,443,69021,534,231,72922,459,569,99023,425,149,605

4.80%4.80%4.80%4.80%4.80%4.80%

INFLATION ASSUMPTION4.80%4.80%3.00%3.00%3.00%3.00%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%

Page &P8/2016

Exec Summary

SOUTH DAKOTA INVESTMENT COUNCIL

Long-Term Plan

Executive Summary

FY 2019FY 2024FY 2029


Personal Services

Number of Employees34.2536.2534.25

Base Compensation - Total Staff5,717,652.947,649,141.629,398,134.75

Staff Attorney (1/4 FTE) & Interns63,933.8671,457.4579,866.39

Investment Council6,227.006,227.006,227.00

Flexibility funds-Retirements & Resignations158,589.75177,252.23198,110.86

Investment Incentive Maximum9,931,509.1113,509,864.9416,628,238.06

Benefits2,465,406.913,261,696.793,973,552.98

Total Personal Services18,343,319.5724,675,640.0230,284,130.05

Operating Expenses

Contractual Services1,860,3682,012,5652,221,791

Travel85,00095,003106,182

Office Supplies & Postage9,00010,05911,243

Capital Assets40,52052,11858,867

Total Operating Expenses1,994,8882,169,7452,398,083

Total Investment Council Budget20,338,20826,845,38532,682,213

ASSET SUMMARY *

Internal Assets11,928,456,96914,711,908,91518,154,490,944

External Assets3,463,100,4104,271,199,3625,270,658,661

Total Assets15,391,557,38018,983,108,27723,425,149,605

EXPENSE SUMMARY

Internal Expenses20,338,20826,845,38532,682,213

External Manager Fees38,094,10546,983,19357,977,245

Total Expenses58,432,31273,828,57890,659,458

UNIT COST SUMMARY **

Internal Expenses as % of Total Assets0.095%0.100%0.098%

Total Expenses as % of Total Assets0.343%0.348%0.346%

* Projections based on long-term assumed returns applied to 6/30/17 assets. Updated each June 30.

**Unit Cost Summary uses assumed average investment performance incentives

Note: FY 19 amounts differ from actual budget request. The LTP includes an assumed 2.25% salary policy

Internal Expenses as % of Total Average Assets0.090%0.095%0.093%

Total Expenses as % of Total Average Assets0.343%0.347%0.346%

Transition incr

FY 15FY16FY17FY18FY19FY20FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30FY31FY32FY33FY34FY35FY36FY37FY38FY39FY40FY41FY42

actual sal polactual sal polactual 0% sal pol

Normal LTP increases assuming a 2.25% salary policy - to be adjusted each year to actual salary policy

FOR LTP INCREASES:Asst Portfolio Mgr - complete CFAAssoc PF MgrPortfolio MgrSr Portfolio Mgr

Total LTP increase11.00%12.70%16.75%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%14.00%14.00%9.00%7.50%7.50%7.50%9.50%4.00%

LTP Increase1.80%1.80%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%1.75%

Transitional Increase7.20%8.20%15.00%10.00%5.00%15.00%7.00%5.00%5.00%11.00%10.00%10.00%10.00%5.00%3.50%3.50%3.50%5.50%0.00%

Salary Policy2.00%2.70%0.00%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%2.25%

Hire - Year 012345678910111213141516171819

Example using $54,590 1st year ending salary54,59060,59568,29079,72990,89199,071117,895130,863142,641155,479178,801203,833166,323189,608206,673222,173238,836256,749281,140292,386

with a hire in FY 201511.00%12.70%16.75%14.00%9.00%19.00%11.00%9.00%9.00%15.00%14.00%-18.40%14.00%9.00%7.50%7.50%7.50%9.50%4.00%

012345678910111213141516171819

2,00456789101112131415161718192021222325

2,0067891011121314151617181920212223242526

FY 2018FY19FY20FY21FY22FY23FY24FY25fy26

Ross, Lee & Danielle

Page &P8/2011

Promo Incr

Illustrative Promotional Increases as of FY 2014

Scenario

Yrs ExpSalary Title

050,476New FTE - Research Analyst

0.553,000Six-month probation

156,816

261,475

370,819Assistant Portfolio Manager

478,043

582,101

690,475Associate Portfolio Manager

796,989

8102,033

9107,339

10123,654Portfolio Manager

11136,267

12150,166

13165,483

14174,088

15179,659

16185,408

17191,341

18199,875Senior Portfolio Manager

NOTES

Per Matt and Brett on 5/12/16:

---Matthew will be 98% of Lesky/Dan's compensation going forward until decision to adjust to same level

---Makenzie will be 96.2% of Matthew's compensation going forward until decision to adjust to closer level

---Makenzie's 6 month probation is up 6/9/16. Her increase effective 6/9/16 will consist of her probation increase (10%),

state salary policy (2.7%), and promotional increase of 5.45%, for a total of 18.15%

Hire compensation 49,628 --- 18.15% increase on 6/9 to $58,637 (96.2% of MC's $60,953 FY 17 comp)

FY 2017 Budget and Actual

14

Actual Exp ReceivedFY 2017 FY 2017 Unexpended

PERSONAL SERVICESTOTAL FTEs 31.25 32.25 BASE COMPENSATION

Base Compensation - Investment Staff 4,436,096 4,730,664 294,568 *Base Comp - Accounting, Admin & Longevity 395,671 420,330 24,659TOTAL STAFF - FULL TIME 4,831,767 5,150,994 319,226P/T Staff Attorney & Interns 46,337 62,527 16,190Investment Council 3,225 6,227 3,002Retirement & resignation flexibility funds 0 155,100 155,100Benefits 915,531 996,475 80,944Total Base Compensation 5,796,861 6,371,323 574,462

Investment Performance IncentivesMaximum Potential Investment Perf Incentive 3,917,062 8,921,550 5,004,488Benefits 480,197 1,231,174 750,977Total Investment Performance Incentives 4,397,259 10,152,724 5,755,465

Total Personal Services 10,194,120 16,524,047 6,329,927

OPERATING EXPENSESContractual Total (see appendix for further details) 1,560,584 1,662,132 101,548Travel 66,817 85,000 18,183Office Supplies & Postage 5,953 12,733 6,780Capital Assets 37,885 44,400 6,515

Total Operating Expenses 1,671,240 1,804,265 133,025

TOTAL BUDGET 11,865,359 18,328,312 6,462,952

* Includes $54,443 Allianz reimbursement & unused compensation

Note: Budget is funded as needed and ended year with a cash balance of $1,929,561 which is credited against FY 2018 authorized budget

FY19 Budget Request


FY 2017 Year-End Budget Summary

Actual ExpReceived

FY 2017FY 2017Unexpended

PERSONAL SERVICES

TOTAL FTEs31.2532.25

BASE COMPENSATION

Base Compensation - Investment Staff4,436,0964,730,664294,568*Allianz reimb54,443

Base Comp - Accounting, Admin & Longevity395,671420,33024,659Vacant FTE197,183

TOTAL STAFF - FULL TIME4,831,7675,150,994319,226LWOP-BF42,942

P/T Staff Attorney & Interns46,33762,52716,190294,568

Investment Council3,2256,2273,002

Retirement & resignation flexibility funds0155,100155,100

Benefits915,531996,47580,944

Total Base Compensation5,796,8616,371,323574,462

Investment Performance Incentives

Maximum Potential Investment Perf Incentive3,917,0628,921,5505,004,488

Benefits480,1971,231,174750,977

Total Investment Performance Incentives4,397,25910,152,7245,755,465

Total Personal Services10,194,12016,524,0476,329,927

OPERATING EXPENSES

Contractual Total (see appendix for further details)1,560,5841,662,132101,548

Travel66,81785,00018,183

Office Supplies & Postage5,95312,7336,780

Capital Assets37,88544,4006,515

Total Operating Expenses1,671,2401,804,265133,025

TOTAL BUDGET11,865,35918,328,3126,462,952

* Includes $54,443 Allianz reimbursement & unused compensation

Note: Budget is funded as needed and ended year with a cash balance of $1,929,561 which is credited against FY 2018 authorized budget

FY 2018 Authorized Budget19,299,621

Less FY2017 Cash Balance1,929,561

17,370,060

OPERATING BUDGET

ActualReceived


CONTRACTUAL SERVICES

Investment Services

Consulting Services030,00030,000

Investment Accounting, Performance Benchmarking98,275106,0007,725

Investment Databases, Newsfeeds & Quote Fees510,313517,3367,023

Investment Research Services279,124293,18514,061

Flexibility - From Brokerage to Independent Research115,000120,0005,000

Total Investment Services (see next page for further details)1,002,7131,066,52163,808

Administrative Expenses

Office Rent125,069125,069(0)

Bond/Liability Insurance2,7007,8005,100

Telephone15,76914,000(1,769)

Office Equip Rental/Maintenance4,8476,0561,209

Bureau of Info & Telecommunications (BIT) 57,91661,4543,538

State Central Services11,57911,698119State Central Services:

Legislative Audit45,49051,5006,010Property Mgmt129.86

Attorney General's Office - Legal Services018,50918,509Purchasing220.92

Custodial Fees - Global260,381263,0252,644Central Services10,709.73

Seminars/Educational Programs32,95433,500546Records Mgmt518.40

Business Publications1,1673,0001,83311,578.91

Total Administrative Expenses557,872595,61137,739

TOTAL CONTRACTUAL SERVICES1,560,5841,662,132101,548659,419.23

TRAVEL66,81785,00018,183

OFFICE SUPPLIES & POSTAGE5,95312,7336,780

CAPITAL ASSETS37,88544,4006,515

TOTAL OPERATING EXPENSES1,671,2401,804,265133,025

Actual (est)Received


INVESTMENT SERVICES-DETAILED

Consulting Services

Benchmarking/Compensation030,00030,000

Legal Consulting Services000

Subtotal030,00030,000

Investment Accounting, Performance, Benchmarking

BNY/Mellon Performance & Risk Analysis7,50010,0002,500

S&P 1200 14,30012,000(2,300)

S&P 1000 2,0002,0000

S&P USA11,00010,000(1,000)

Citi Index010,00010,000

Portia 63,47562,000(1,475)

Subtotal98,275106,0007,725

Investment Databases, Newsfeeds & Quote Fees

Bloomberg116,760124,3627,602

Factset235,975235,180(795)Quote Fees:FY 2017

Reuters Fundamental Index43,20047,6284,428Bloomberg22,995.25

Quote Fees (incl. Bloomberg/Factset)64,60367,1822,579Factset12,878.24

Dow Jones News Service49,77642,984(6,792)NYSE15,382.00

Subtotal510,313517,3367,023OPRA360.00

Investment Research ServicesLondon St Exch-Sedol2,987.68

KDP High Yield15,60020,0004,400S&P Cusip10,000.00

Gimme Credit FI Research17,82025,0007,180TOTAL64,603.17

Credit Sights79,56082,2202,660

Reorg Research ($70,000 spent - in flexibility line)000

Insider Score25,00026,5251,525

Boyars Intrinsic Value15,00015,0000

Rystad Energy ($45,000 spent - in flexibility line)000

Morningstar67,50080,00012,500

S&P Capital IQ48,89439,690(9,204)

Value Line9,7504,750(5,000)

Flexibility - From Brokerage to Independent Research115,000120,0005,000

Subtotal394,124413,18519,061

Total Contractual - Investment1,002,7131,066,52163,808

unspent63,808

PERSONAL SERVICES 1Actual (est)Received

BASE COMPENSATIONFY 2017FY 2017Unexpended

State Investment OfficerMC460,629460,6290

Asst Investment Officer-Global Equity/Merg ArbBF248,080291,02242,942

Asst Investment Officer-Fixed Income/DirTO248,993248,9930

Asst Investment Officer-Fixed Income/AltCN248,354248,354012125.92

Senior Portfolio Manager-Global EquitySS216,029216,02909923.74

Senior Portfolio Manager-Small/MidCap EquitySH216,029216,02909923.74

Senior Portfolio Manager-Fixed Income / HESP 2SN143,151143,151012125.92

Senior Portfolio Manager-Global EquityJZ214,341214,341011024.83

Senior Portfolio Manager-Global EquityMHW214,341214,34109923.74

Senior Portfolio Manager-Global EquityCC214,341214,34102701.12

Portfolio Manager-Small/Mid Cap EquityDH212,447212,44702216.11

Portfolio Manager-Global EquityAR207,635207,63504042

Portfolio Manager-Global EquityJE199,414199,41409923.74

Portfolio Manager-Small/Mid Cap EquityJE199,414199,414010913.33

Portfolio Manager-Global EquityRS199,414199,41409923.74

Portfolio Manager--Global EquityRR199,414199,414012125.92

Portfolio Manager--- 0197,183197,18312125.92

Associate Portfolio Manager--Conv Arb/High YieldRS164,673164,673012125.92

Associate Portfolio Manager-Global EquityLM129,490129,490012125.92

Associate Portfolio Manager--Conv Arb/High YieldDM129,490129,490012125.92

Assistant Portfolio Manager--Conv Arb/High YieldAC112,589112,589012125.92

Research AnalystZN68,29068,290012125.92

Research AnalystDE62,19762,19709923.74

Research AnalystLV62,19762,197012125.92

Research Analyst - new 9/2015MC60,95360,953012125.92

Research Analyst - new 12/9/15 (pt 8/31-12/8/15)MZ58,63758,637012125.92

Research Analyst - new FY 2018new012125.92

Research Analyst - new FY 2018new0248076.79

Senior Investment AccountantCP87,79887,7980

Investment Accountant IIISR76,38476,3840

Investment Accountant IKS70,23970,2390

Investment Accountant IBE61,54961,5490

Business ManagerLR69,30569,3050

Asst Business Manager/AccountantCS19,91734,70114,784JoAnn 18,750 & Christa 11,66.68

Staff Attorney (1/4 FTE)38,01338,513500

Intern8,32424,01415,690


Longevity Pay10,48010,460(20)

Unused Compensation - Accounting FY 2017- 09,8959,895

Investment Staff Base Compensation4,490,5394,730,664240,125The difference between above summary in PS vs Actual

Administrative, Accounting & Longevity395,671420,33024,659here is Allianz reimbursement of $54,443

TOTAL STAFF - FULL TIME4,886,2105,150,994264,78354,443

P/T Staff Attorney & Interns46,33762,52716,190


Maximum Potential Performance Incentive3,917,0628,921,5505,004,488

Retirement & resignation flexibility funds0155,100155,100

Benefits1,395,7292,227,649831,920

PERSONAL SERVICES10,248,56316,524,0476,275,484

1

Compensation with average Investment Performance Incentive is the level used in setting targeted 30% discount to cost-of-living adjusted private sector investment industry benchmark

2HESP-portion of employee salary reimbursed by Allianz - In FY2017 $54,443

CENTER 3210

Salaries5,374,848

Benefits996,475

Total personal services for 32106,371,323

CENTER 3211

Salaries8,921,550

Benefits1,231,174

Total personal services for 321110,152,724

TOTAL PERSONAL SERVICES16,524,046

FY 17 - FINAL

Personal Benefits - 3210

Social Security & Medicare (7.65% on total compensaion--incl retirement portion)0.0765420,311.00

Retirement - 6%0.06300,935.00

Unemployment Insurance .00100.0015,233.00

Workers Compensation .00050.00052,617.00

Health/Life Insurance $8,387 per FTE for FY 188,470.00267,379.00

Total Benefits 3210996,475.00

less health ins premiums - decreased benefits by BFM by $55,397915,531.48996,475.00

Personal Benefits - 3211

Social Security & Medicare (7.65% on total compensaion--incl retirement portion)0.0765682,498.58

Retirement - 6%0.06535,293.00

Unemployment Insurance .00100.0018,921.55

Workers Compensation .00050.00054,460.78

Total Benefits 32111,231,173.90

480,197.061,231,174

TOTAL BENEFITS - SDIC2,227,648.90

1,395,728.542,227,649.06

use actuals loaded by BFM

FY 2017 Capital Assets:

2 desktop computers @ 1,100 ea (replacements)2,200

Monitors - replacement (2 new & 5 replace at $150 ea)1,050

7 laptops @ $1,000 replacements7,000

2 docking stations replacements at $100200

keyboard/mouse replacements (6 at $50)300

10,750

telephone equipment (2 new phones at $450 ea)900

2 telephone headsets 285 ea570

1470

furniture & chair upgrades25,000

books (5 in CFA $600 ea & 300 misc)3,300

40,520

15

FY 2019 Budget Request Summary

Received FY 2019 FY 2018 Budget Request % chng

PERSONAL SERVICESTOTAL FTEs 34.25 34.25 BASE COMPENSATION

Base Compensation - Investment Staff 4,965,754 5,154,064 3.79%Base Comp - Accounting, Admin & Longevity 428,982 438,930 2.32%TOTAL STAFF - FULL TIME 5,394,736 5,592,994 3.68%P/T Staff Attorney & Interns 62,527 62,526 0.00%Investment Council 6,227 6,227 0.00%Retirement & resignation flexibility funds 155,100 155,100 0.00%Benefits 1,049,665 1,077,274 2.63%Total Base Compensation 6,668,255 6,894,121 3.39%

Investment Performance IncentivesMaximum Potential Investment Perf Incentive 9,461,327 9,931,508 4.97%Benefits 1,305,663 1,370,548 4.97%Total Investment Performance Incentives 10,766,990 11,302,056 4.97%

Total Personal Services 17,435,245 18,196,177 4.36%

OPERATING EXPENSESContractual Total (see next page for further details) 1,726,123 1,860,368 7.78%Travel 85,000 85,000 0.00%Office Supplies & Postage 12,733 9,000 -29.32%Capital Assets 40,520 40,520 0.00%

Total Operating Expenses 1,864,376 1,994,888 7.00%

TOTAL BUDGET 19,299,621 20,191,065 4.62%

UNIT COST SUMMARY *Internal Expenses as % of Total Adjusted Assets 0.094% 0.095% **Total Expenses as % of Total Adjusted Assets 0.342% 0.343%

** Unit cost includes an assumed 2.25% salary policy

* Based on total assets adjusted to long-term value and expenses using assumed average investment performance incentives

FY19 Budget Request


FY 2019 Budget RequestDo not include these two columns for Personal Services

FY 2019

Budget Request

ReceivedFY 2019 Incl 2.25% sal pol

FY 2018Budget Request% chngBase LTP Salaries% chng

PERSONAL SERVICES

TOTAL FTEs34.2534.2534.25

BASE COMPENSATION

Base Compensation - Investment Staff4,965,7545,154,0643.79%5,269,3256.11%

Base Comp - Accounting, Admin & Longevity428,982438,9302.32%448,3264.51%

TOTAL STAFF - FULL TIME5,394,7365,592,9943.68%5,717,6515.99%

P/T Staff Attorney & Interns62,52762,526-0.00%63,9332.25%

Investment Council6,2276,2270.00%6,3672.25%

Retirement & resignation flexibility funds155,100155,1000.00%158,5902.25%

Benefits1,049,6651,077,2742.63%1,094,8694.31%

Total Ba

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