St. Paul Teachers' Retirement Fund Association

February 28, 2018

Susan Lenczewski, Executive Director
Legislative Commission on Pension and Retirement
55 State Office Building
100 Rev. Dr. Martin Luther king Jr. Boulevard
St. Paul, MN 55155-1201

Dear Ms. Lenczeski:

The St. Paul Teachers Retirement Association Board of Trustees met on February 21, 2018 to review the results of Experience Study completed by SPTRFA's actuarial firm, Gabriel Roeder Smith & Co. The Board unanimously approved the Experience Study recommendations. A summary of the key recommendations adopted by the Board follows:

• Decrease the current investment return assumption from 8.0% to 7.5%, see page B-6.
• Decrease the price inflation assumption from 3.00% to 2.50%, see page B-3.
• Decrease the payroll growth assumption from 4.00% to 3.00%, see page B-5.
• Adjust rates of merit and seniority, resulting in an overall decrease to the assumed rates of merit and seniority increases, see page C-1.
• Adjust the assumed retirement rates and rates of withdrawal, see pages D-1 and E-1, respectively.
• Decrease the assumed rates of disability by 16%, see page F-1.
• Change the base mortality table to the RP-2014 mortality table, white collar adjustment, with rates age-adjusted for some tables to better fit observed plan experience and with future improvement projected using scale MP-2017, see page G-1.

Details regarding each of the recommendations is included in the attached Experience Study. The SPTRFA Board respectfully requests that the LCPR approve the changes adopted by the SPTRFA Board and include such changes, where required to be reflected in statute, in SF 2620 I HF3053 for use in SPTRFA's FY '18 actuarial valuation report.

We would be happy to address any questions you may have. Please feel free to contact me at 651-642-2550 if we can be helpful.

Respectfully,

Jill E. Schurtz
Executive Director