PERS defined‑contribution review: MDC and OP see quarter losses; trustees press staff to audit adjunct eligibility

Staff and consultants briefed trustees on the defined‑contribution platforms (MDC and OP), walking through quarterly results, manager performance and vendor transitions.

Kalen staff said the MDC plan experienced a mixed quarter driven by widespread unrealized losses across many asset classes and modest cash outflows; one presenter described “a total loss of about $105 million on an unrealized basis during the quarter,” and later staff characterized year‑to‑date MDC aggregate movement as approximately $140 million when combining multiple platforms. Managers flagged for additional diligence included the PGI Midcap strategy (recent underperformance tied to style), a large‑cap growth manager on the watch list and an international manager with longer‑term underperformance.

Trustees asked about implementation of Tier‑Five defined‑contribution options and a planned Roth rollout for employers (Empower is distributing notices to employers). A trustee raised a separate operational question about changes to the OP match structure and requested a list of OP participants by employer, department and job title after July 1 to verify statutory/regulatory eligibility; staff replied they had been investigating adjunct‑professor cases and found some adjuncts were working sufficient hours (sometimes under alternate titles such as “visiting professor”) to qualify under benefits rules and said they would continue the review.

Staff also provided a watch‑list update noting some funds scheduled for deeper review and reminded trustees that watch‑list items are informational unless staff brings formal recommendations.

Next steps: staff will continue enhanced due diligence on flagged managers and return with the employer/job‑title participant list after the July 1 timeframe; trustees requested a follow‑up on adjunct eligibility findings and audit coverage.