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CalSTRS operational review urges tech and risk investment; committee approves SIS policy change and SAA step
Summary
A Mercer review of investment services recommended strengthening operational risk, valuation oversight and technology; trustees approved a policy revision to move public sustainable equity into Global Equity and adopted the next SAA migration step (1% shift from Global Equity to inflation‑sensitive assets).
An independent review by Mercer Sentinel found CalSTRS’ Investment Services division performs well on core controls and compliance but is operating at capacity given increasing private‑market complexity. Mercer recommended adding oversight roles, expanding operational‑risk functions, and investing in technology and analytics to maintain the organization’s leadership and protect assets (SEG 4192–4339).
April Wilcox, director of Investment Services, and the Mercer team told trustees the next step is a multiyear plan to balance operational risk, capabilities and costs; Scott Chan and staff said they will bring technology strategy details to the July off‑site (SEG 4340–4350).
Related to staffing and structure, the committee considered a first reading and then a voice vote on a revision to the Sustainable Investment and Stewardship (SIS) policy that ‘graduates’ the SIS public active equity strategy into the Global Equity asset class. Staff characterized the change as administrative — shifting where strategies are managed rather than altering the fund’s total public equity risk budget — and said it better aligns resources to scale private‑market low‑carbon investments (SEG 4420–4460, SEG 4556–4566).
Trustees moved and approved the policy revision by voice vote; staff recorded the action as adopted unanimously during the meeting (SEG 4675–4688). The committee also advanced a step in the 2023 Asset‑Liability Management migration by adopting a July‑1 effective change that reduces Global Equity by 1 percentage point and increases inflation‑sensitive allocations by 1 point; Makita provided a concurrence memo in the packet (SEG 4720–4775).
The committee recorded no roll‑call opposition to these actions in the public record and requested follow‑up materials and implementation details as appropriate.
