june 2013 board book

Regular Meeting of the Board of Directors 9:30 a.m.

June 4, 2013 NMRHCA Board Room

2nd Floor Suite 207 4308 Carlisle Blvd. NE

Albuquerque, NM 87107

Agenda

Page

I. Call to Order Mr. Santistevan, Chair

II. Roll Call to Ascertain Quorum Ms. Beatty, Recorder

III. Pledge of Allegiance Mr. Santistevan, Chair

IV. Public Forum and Introductions Mr. Santistevan, Chair

V. Approval of Agenda Mr. Santistevan, Chair

VI. Approval of Regular Mr. Santistevan, Chair 4 Meeting Minutes April 2, 2013

VII. 3rd Quarter Budget Update Mr. Archuleta, Deputy Director 11

VIII. Five Year Look Back Mr. Tyndall, Executive Director 17

IX. Health Care Reform Mr. Tyndall, Executive Director 27

X. Legislative Activity Mr. Tyndall, Executive Director 28

XI. Preliminary Discussion of Mr. Tyndall, Executive Director 30 Plan Year 2014 Considerations

XII. Date & Location of the next Regular Board Meeting July 9th & 10th 2013, Taos Sagebrush Inn 1508 Paseo del Pueblo Sur, Taos, NM 87571

XIII. Other Business Mr. Santistevan, Chair

XIV. Adjourn

1

N M R H C A B O A R D O F D I R E C T O R S

June 2013

Ms. Karen Sucher

NEA, Classroom Teachers Assoc., & AFT New Mexico

PO Box 1983

Tijeras, NM 87509

[email protected]

(H) 505.286.8702

Ms. Jan Goodwin, Executive Director

Educational Retirement Board

PO Box 26129

Santa Fe, NM 87502-0129

[email protected];

(W) 505-827-8030

(F) 505-827-1855

Ms. Elizabeth Jeffreys

Active State Employee

Office of the General Counsel

Human Services Department

[email protected];

(W) 505-827-7701

The Honorable Mr. Wayne Johnson

NM Association of Counties

Bernalillo County Commissioner

One Civic Plaza, NW


Ms. Karen Brown, Deputy County Commissioner

Bernalillo County, District 5

[email protected];

505-468-7212 (office)

505-462-9821 (fax)

The Honorable Mr. James B Lewis

NM State Treasurer

P.O. Box 608

Santa Fe, NM 87504-0608

2019 Galisteo, Bldg. K, 87505

[email protected]

(W) 505-955-1122

Mr. Terry Linton

Governor’s Appointee

1204 Central Ave. SW


[email protected]

505-247-1530

Mr. Joe Montaño, Secretary

NM Assoc. of Educational Retirees

5304 Hattiesburg NW


[email protected]

(H) 897-9518

Ms. Olivia Padilla-Jackson

NM Municipal League

Director, Financial Services

City of Rio Rancho

[email protected]

W: 505-896-8761

Mr. Wayne Propst

Executive Director

Public Employees Retirement Association

PO Box 2123

Santa Fe, NM 87504-2123

[email protected]

(W) 505-476-9301

Mr. Alfredo Santistevan, President

Designee of NM State Treasurer

[email protected]

505-228-4487

Mr. Tom Sullivan, Vice President

Superintendents’ Association of NM

800 Kiva Dr. SE


[email protected];

505-330-2600

Mr. Doug Crandall

Retired Public Employees of New Mexico

[email protected]

505-294-5243

2

mailto:[email protected]












Roll Call

June 4, 2013

: AM

Member

Present

Mr. Santistevan, President

Mr. Sullivan, Vice President

Mr. Montaño, Secretary

Ms. Brown

Ms. Goodwin

Ms. Jeffreys

Mr. Johnson

Mr. Linton

Ms. Padilla-Jackson

Mr. Crandall

Mr. Propst

Ms. Karen Sucher

3

ACTION SUMMARY

RETIREE HEALTH CARE AUTHORITY/REGULAR BOARD MEETING

April 2, 2013

Item Action Page #

APPROVAL OF AGENDA Approved 2

APPROVAL OF MINUTES:

February 5, 2013 Approved 2

LEGISLATIVE UPDATE Informational 2

OPERATIONAL UPDATE Informational 3

OPERATIONAL UPDATE Informational 5

NAPRAPATHIC MANUAL THERAPY

DISCUSSION Informational 6

4

MINUTES OF THE

NM RETIREE HEALTH CARE AUTHORITY/BOARD OF DIRECTORS

REGULAR MEETING

April 2, 2013

CALL TO ORDER

A Regular Meeting of the Board of Directors of the New Mexico Retiree Health Care Authority was called to

order on this date at 9:30 a.m. in the NMRHCA Board Room, 4308 Carlisle Boulevard, N.E., Albuquerque, New

Mexico.

ROLL CALL TO ASCERTAIN QUORUM

A quorum was present, as follows:

Members Present:

Mr. Alfredo Santistevan, President

[designee of the Honorable James B. Lewis, NM State Treasurer]

Mr. Tom Sullivan, Vice President [by telephone]

Mr. Joe Montaño, Secretary

Mr. Julian Baca

Ms. Jan Goodwin

Ms. Elizabeth Jeffreys [by telephone]

Mr. Wayne Johnson

Mr. Terry Linton

Ms. Karen Sucher

Mr. Jeff Varela

Members Excused: Ms. Olivia Padilla-Jackson

Staff Present:

Mr. Mark Tyndall, Executive Director

Mr. David Archuleta, Deputy Director

Ms. Ramona Martinez, Director, Public Affairs

Mr. Tomas Rodriguez, IT Director

Mr. Rudy M. Bantista, Communications & Recording Secretary

Ms. Judith S. Beatty, Recorder

Others Present: [See sign-in sheet.]

PLEDGE OF ALLEGIANCE

Mr. Archuleta led the pledge.

5

PUBLIC FORUM AND INTRODUCTIONS

None.

APPROVAL OF AGENDA

Mr. Johnson moved approval of the Agenda, as published. Ms. Goodwin seconded the motion,

which passed unanimously by voice vote.

APPROVAL OF REGULAR MEETING MINUTES: February 5, 2013

Mr. Montaño moved for approval of the Minutes of the February 5 meeting, as submitted. Mr.

Linton seconded the motion, which passed unanimously by voice vote.

LEGISLATIVE UPDATE

Mr. Tyndall reported that SB 71 received a late-night hearing on March 9 from the Senate Finance

Committee, but it passed through with no recommendation, and the NMRHCA never got a vote on the

Senate floor. He commented that the ERB and PERA pension plans were the priority in this legislative

session and both of those pieces of legislation went through. NMRHCA did not receive quite the same

amount of discussion or attention as the two pension plans did, and as the end of the 60-day session

approached, other pressing issues came to the forefront.

Mr. Tyndall commented that this initially does not pose a problem, as NMRHCA is set to run modest

budget surpluses through at least 2018. He said it was important for NMRHCA to begin making its case to

legislators in this session, however, to make sure they understood that the long-term viability of the program

would require that contribution levels continue to support it.

Mr. Tyndall said NMRHCA will continue to work with interim legislative committees as well as the

Investments & Pensions Oversight Committee, LFC and DFA to make sure they are aware of the

NMRHCA’s ability and need to fulfill its statutory obligations.

Chairman Santistevan stated that the agency will be preparing an information package over the next few

months to help legislators understand the NMRHCA program before they head into the 2014 session. The

package will include a detail of savings realized through various cost reduction measures, and will also note

that the agency has not dipped into the fund corpus or made any budget adjustment requests for the past

three or four years.

Chairman Santistevan thanked member Jeff Varela and LFC Chairman Rep. Luciano “Lucky” Varela

for working to restore language in HB 2 that would allow the agency to continue to make budget

adjustments when actual health plan provider costs exceed the budget.

Mr. Johnson asked what, if any, assumptions are being made on impacts the NMRHCA could realize

from the Affordable Care Act (ACA).

6

Mr. Tyndall responded that, while some elements are impossible to predict at this point, Medicare Part

D subsidies will bring in an additional $6.7 million to the agency as the ACA closes the donut hole. On the

other side of that, NMRHCA is projecting very high trends in Medicare Advantage plans as ACA reduces

subsidies to private plans that administer those plans.

Mr. Tyndall also noted that if the New Mexico Health Insurance Exchange turns out to be a viable

alternative for some members, then it would be very positive for the NMRHCA provided the agency

manages it well.

OPERATIONAL UPDATE

Staffing update

Mr. Tyndall welcomed David Archuleta as the NMRHCA’s new Deputy Director. He said Mr.

Archuleta comes to the agency with a solid background in public service, including as an analyst for the

LFC, budget analyst for the DFA, employee of Risk Management working on the financing of employee

benefits, and budget analyst for the Department of Transportation.

Mr. Tyndall stated that candidates for Chief Financial Officer have been interviewed, and the agency is

working with the State Personnel Office in developing an offer. He said the first round of interviews for HR

Manager have been completed. The intent is to have these two individuals on board by the end of April.

Customer Service

Mr. Tyndall reported that 40,051 calls were answered through the 800 telephone number in calendar

year 2012, in an average of 9 seconds. He commended individual staff members for their dedicated service

to the membership.

Mr. Tyndall noted NMRHCA continues to receive calls about the prescription drug plan changes.

NMRHCA is not the only agency to add coinsurance to the mail order prescription program; the state is

doing that as well as increasing rates by 15%, and the concern is that NMRHCA not inadvertently put

members in a situation where some make a conscious economic decision not to take their medication. He

said the agency has met with Express Scripts a couple of times, now, and may recommend carving out

diabetic medications from the coinsurance, a cost to the plan of about $400,000. He said the change to the

coinsurance on the prescription mail order piece is saving the plan an estimated $3 million.

Chairman Santistevan said all walk-ins should provide an email address, if they have one, so that

newsletters can be sent out electronically when possible, and through the postal service for members who do

not use email.

Mr. Rodriguez responded that about 9,000 email addresses are now in the database.

Procurements

Mr. Tyndall reported on two procurements:

7

-- Medicare Advantage Plans: RFP release, April 12; recommendations to Board, July; contract

effective date, January 1, 2014. Board members wishing to participate on the evaluation committee are

welcome.

-- Pharmaceutical Benefits Manager (PBM): RFP release, September/October 2013; recommendations

to Board, February 2014; contract effective date, July 1, 2014.

IBAC/Carrier initiatives

Mr. Tyndall said NMRHCA continues to work with IBAC, which meets every month and is moving

forward on some important initiatives.

-- Specialty medications represent the greatest trend in cost increases going forward. Predictions are

that this will represent a 17% increase every year.

Mr. Tyndall said there are a number of medications that are self-administered, which is where IBAC will

focus first. About half of specialty medications are administered through providers when potentially they

can be administered at home, thus eliminating an additional layer of cost. Accredo, which is owned by

Express Scripts and Medco, buys specialized medications at very good discounts, and medications like

Enbrel and Humira do not need to be infused by a doctor.

-- Continuing direct discussions with provider groups to establish feasibility and possible savings

associated with “coordinated care” models (provider risk sharing).

-- Pricing transparency tool that allows members to see what their deductible/coinsurance will total for

a given procedure.

BUDGET UPDATE

Mr. Archuleta presented the FY 2013 second quarter budget review.

Health Care Benefit Fund

-- As of December 31, 2012, expenditures are $115.7 million and revenues are $130 million, for a

surplus of $14 million.

-- Management projects annual solvency fund contribution of $27.5 million in FY 2013.

-- Claim expenditures for first half of FY 2013, as compared to the first half of FY 2012, have

increased by about 10.5%. Contributing factors: 5% growth in FY 2013 combined with 5.5% increase in

claim costs; neither plan design changes nor increase in retiree premiums effective January 1, 2013, are yet

reflected in reported amounts.

Program Support Fund

8

-- Agency budget for FY 2013 is $2.6 million. As of December 31, 2012, expenditures are $1.2 million

and revenues are $1.3 million, for a reserve of $98,000.

-- For FY 2013, Management is projecting a reserve of $287,800 resulting from staff vacancies and

close monitoring of expenditures in contractual services and other costs.

Cash Balance

-- Ending cash, as of December 31, 2012: $8.4 million.

In reviewing the Program Support Fund contract status, Mr. Archuleta said a BAR will be requested in

May to move anticipated savings in contractual savings to other costs.

Mr. Tyndall noted that the NMRHCA’s appropriation request, which was based on its projected

expenditures, was cut by over $12 million for FY 2013. As a result, the agency will have to make a BAR

request for additional funding in the next month or so, and may also have to do the same for FY 2014.

NAPRAPATHIC MANUAL THERAPY DISCUSSION

Mr. Tyndall noted that naprapathic therapy is a benefit covered under the State of New Mexico plan, but

is not covered by NMRHCA, NMPSIA or APS. He said there has been discussion about ways of adding this

as a benefit without incurring any additional cost to the plan. NMRHCA could include it with the other

alternative therapies that are offered by the agency as a benefit, but the only way to make it cost-neutral

would be to lower the maximum from $1,500 to $1,000 or $1,250, and then take money not spent toward

the maximum and apply it to the new members who would be receiving the benefit.

Mr. Varela said he brought this to the Board’s attention last year because he has received several

inquiries about the availability of this benefit.

Dr. Patrick Nuzzo, CEO of Naprapathic Medicine of New Mexico, made a presentation. Naprapathy is a

hand-on manual therapy that uses no opiates or other medication, and is system of manually applied

movements designed to bring motion with consequent release of tension into abnormally tensed and rigid

ligaments, muscles and articulations of the human body.

Chairman Santistevan noted that acupuncture was eliminated from the Medicare Supplement plan a few

years ago, but then restored after there was an outpouring of support for it. He suggested adding naprapathy

as a benefit but keeping it cost neutral.

Mr. Montaño asked Mr. Tyndall to provide information on how many people have reached their

maximum.

Mr. Montaño asked how many people in the state plan avail themselves of this service, and Dr. Nuzzo

responded they have been in business since 2005 and have treated about 5,000 state employees since then.

9

Mr. Tyndall agreed to bring forward information at the July meeting on a cost-neutral way to include

this benefit as part of the plan changes that would be implemented in January 2014.

Chairman Santistevan said this would be reviewed through the committee process in the interim.

DATE AND LOCATION FOR THE NEXT REGULAR BOARD MEETING:

MAY 7, 2013, 9:30 A.M. NMRHCA BOARD ROOM, 2ND FLOOR,

SUITE 207, 4308 CARLISLE BLVD., N.E., ALBUQUERQUE, N.M.

Board members agreed to hold the annual meeting July 18-19 in Taos, NM.

OTHER BUSINESS

None.

ADJOURNMENT

Its business completed, the NMRHCA Board adjourned the meeting at 11:15 a.m.

10

Impact of Federal Health Care Reform on NMRHCA – A Timeline

March 2010 – Patient Protection and Affordable Care Act (PPACA) signed into law June 2010 -‐ NMRHCA applies for, and is accepted to participate in Early Retiree Reinsurance Program (ERRP) October 2010 – NMRHCA Medicare part B members who hit “donut hole” receive $250 rebate January 2011 – Medicare begins paying for some preventive services at 100% (US Preventive Services Task Force) January 2011 – Medicare premiums increase for high income participants ($85,000 per individual) February 2011 – HHS reimburses NMRHCA $5,915,300 under ERRP December 2012 – Premium holiday for pre-‐Medicare plans using ERRP funds ($3.3 million) January 2012 -‐ Medicare Advantage reimbursements based on quality ratings (some increase; some decrease) January 2012 -‐ Part D “Donut Hole” closes by 50% with improved subsidies to NMRHCA (members premium

increase reduced by 2% and NMRHCA subsidies to increase by $6 million). Donut hole to completely be closed by 2020 with subsidy increases to NMRHCA estimated at $15 million

November 2012 -‐ State of New Mexico declares its intent to establish its own state-‐based Health Benefit

Exchange for individuals and small businesses December 2012 -‐ Premium credit of $230 per pre-‐Medicare retiree provided from remaining ERRP funds ($2.6

million) January 2013 -‐ Begin paying Patient-‐Centered Outcomes Research Institute Fee (PCORI) of $2 per pre-‐Medicare

member per year through 2019 ($250 k over 7 years). January 2014 -‐ Transitional Reinsurance Assessment Fee to be assessed from 2014 to 2016 to help stabilize

premiums in individual market as new high-‐cost individuals begin to access the market. Year one will cost $63 per pre-‐Medicare member ($1 million), year 2 will cost $42 per member ($714k) and year three will cost $26 per member ($442k). In total, NMRHCA will be required to pay approximately $1.7 million spread over three years.

January 2014 -‐ Medicare Advantage plans will be required to have a loss ratio of no less than 85% January 2014 -‐ Initial recommendations from Medicare Independent Payment Advisory Board (IPAB). IPAB will be

provided with a spending target for Medicare programs and develop recommendations to Congress to achieve that target. Recommendations are to be implemented absent specific rejection by Congress.

January 2014 -‐ Coverage to be available for all individuals and small businesses (even for those with pre-‐existing

conditions) through NM-‐based Health Benefits Exchange. January 2014 -‐ Medicaid Expansion to adults with incomes up to 133% of the federal poverty level (?) January 2018 -‐ High-‐cost health Insurance Tax (Cadillac Tax) to be implemented. Actuarial value of plans at this

point in time are still to be determined but likely to include some current NMRHCA options. Excise tax of 40% of value above this point to be imposed if changes not made.

27

Long-term PolicyInvestment Market Value % of Total Target Range

Equity Domestic Large Cap Active 38,046,942.96$ 14% 12.5% 20-30% Large Cap Index 37,375,634.48 14% 12.5% Mid/Small Cap 28,612,971.56 10% 10% 5-15%

38% 35%

International Non US Developed 41,747,512.76 16% 15% 10-20% Emerging Markets 31,276,176.23 10% 15% 10-20%

27% 30%

Fixed Income Core Bonds 96,463,571.92 35% 35% 30-40%

35% 35%

Total 273,522,809.91$ 100% 100%

NEW MEXICO RETIREE HEALTH CARE AUTHORITYPORTFOLIO ALLOCATION

FOR THE MONTH ENDED APRIL 30, 2013

14% Large Cap Active

37% Core Bonds

12% Large Cap Index

16% Non US Developed

11% Emerging Markets

10% Mid/Small Cap

Asset Allocation

41

Large Core Large Non U.S. Non U.S. Mid/SmallCap Active Bonds Cap Index Developed Emerging Cap Total

Market Value March 31, 2013 $37,392,293.52 $95,101,530.67 $36,709,453.98 $39,666,457.86 $31,052,036.66 $28,552,480.71 $268,474,253.40

Prior Month Adjustment 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Contributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Distributions/Withdrawals 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Fees 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Income Earned 41,273.70 301,371.50 0.09 174,459.78 80,112.13 4,213.22 601,430.42

Capital Appreciation/Depreciation 613,375.74 1,060,669.75 666,180.41 1,906,595.13 144,027.43 56,277.63 4,447,126.09

Market Value April 30, 2013 $38,046,942.96 $96,463,571.92 $37,375,634.48 $41,747,512.76 $31,276,176.23 $28,612,971.56 $273,522,809.91

NEW MEXICO RETIREE HEALTH CARE AUTHORITYCHANGE IN NET ASSET VALUE

FOR THE MONTH ENDED APRIL 30, 2013

$0 $25,000,000 $50,000,000 $75,000,000

$100,000,000 $125,000,000 $150,000,000 $175,000,000 $200,000,000 $225,000,000 $250,000,000

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New Mexico Retiree Health Care Authority Market Value of Investment

Fiscal Year 2013

Emerging Markets Non US Developed Large Cap Index Core Bonds Large Cap Active

42

New Mexico State Investment CouncilInvestment Performance Analysis

1211 SW 5th Ave, Suite 900Portland, OR 97204

503.221.4200www.rvkuhns.com

Quarter EndedMarch 31, 2013

43

Retiree Health Care Authority

Page 144

Asset Allocation vs. Target Allocation

Comparative Performance

Comparative Performance

Market Value($)

Allocation(%)

Target(%)

Large Cap US Equity 74,101,622 27.60 25.00

Small/Mid Cap US Equity 28,552,399 10.64 10.00

Non-US Developed Markets 39,666,387 14.77 15.00

Non-US Emerging Markets 31,051,954 11.57 15.00

US Core Bonds 95,101,475 35.42 35.00

Total Fund 268,473,838 100.00 100.00

QTD CYTD1

Year3

Years5

Years10

Years2012 2011 2010

Retiree Health Care Authority Total Fund 4.66 4.66 8.74 7.65 4.31 8.76 13.66 -3.74 13.56

Total Fund Benchmark (Retiree Health Care Authority) 4.44 4.44 8.96 8.24 4.45 8.77 13.02 -0.89 12.43

New Mexico State Investment Council

Retiree Health Care Authority

As of March 31, 2013

Allocations shown may not sum up to 100% exactly due to rounding. Performance shown is gross of fees.

Page 245

Allocation

MarketValue ($)

%

Performance (%)

QTD CYTD FYTD1

Year3

Years5

Years10

Years2012 2011 2010 2009

Domestic EquityNMSIC US Equity Composite 6,549,046,267 38.45 10.58 10.58 18.25 12.54 10.83 6.57 9.64 16.02 -4.34 19.00 38.89

R 3000 Index 11.07 11.07 18.29 14.57 12.97 6.32 9.15 16.42 1.03 16.93 28.34

NMSIC US Large Cap Equity Composite 4,902,831,720 28.79 10.15 10.15 16.86 12.04 10.07 6.86 9.32 16.14 -4.63 17.00 41.95

R 1000 Index 10.96 10.96 18.11 14.43 12.93 6.15 8.97 16.43 1.50 16.10 28.43

IM U.S. Large Cap Equity (SA+CF) Median 10.66 10.66 17.74 13.89 12.61 6.27 9.40 15.93 1.12 15.13 27.91

NMSIC US Large Cap Active Pool 2,528,750,482 14.85 9.42 9.42 15.70 10.10 8.59 6.16 8.77 15.45 -6.46 16.12 42.92

R 1000 Index 10.96 10.96 18.11 14.43 12.93 6.15 8.97 16.43 1.50 16.10 28.43

IM U.S. Large Cap Equity (SA+CF) Median 10.66 10.66 17.74 13.89 12.61 6.27 9.40 15.93 1.12 15.13 27.91

Wellington Management Company 782,118,243 4.59 10.87 10.87 18.23 N/A N/A N/A N/A N/A N/A N/A N/A

R 1000 Value Index 12.31 12.31 21.44 18.76 12.74 4.85 9.18 17.50 0.39 15.51 19.69

IM U.S. Large Cap Value Equity (SA+CF) Median 11.56 11.56 20.40 15.85 12.49 6.01 10.04 15.77 0.20 14.54 25.66

Brown Brothers Harriman 545,024,707 3.20 11.35 11.35 21.00 N/A N/A N/A N/A N/A N/A N/A N/A

R 1000 Index 10.96 10.96 18.11 14.43 12.93 6.15 8.97 16.43 1.50 16.10 28.43

SIC Managed Large Cap Active 499,549,439 2.93 8.17 8.17 12.61 6.71 10.09 6.06 9.04 13.76 -0.02 16.15 33.60

Large Cap Custom Index 10.96 10.96 18.11 14.86 12.97 5.98 8.62 16.54 2.11 15.06 26.46

IM U.S. Large Cap Core Equity (SA+CF) Median 10.70 10.70 17.75 13.97 12.67 6.34 9.31 15.73 1.87 14.87 26.64

J.P. Morgan Asset Management 463,621,823 2.72 6.64 6.64 9.25 N/A N/A N/A N/A N/A N/A N/A N/A

T. Rowe Price 238,436,269 1.40 8.56 8.56 14.99 N/A N/A N/A N/A N/A N/A N/A N/A

R 1000 Growth Index 9.54 9.54 14.70 10.09 13.06 7.30 8.62 15.26 2.64 16.71 37.22

IM U.S. Large Cap Growth Equity (SA+CF) Median 9.24 9.24 15.29 9.04 12.25 6.63 9.09 15.35 -0.01 16.20 34.53

NMSIC US Large Cap Index Pool 2,374,081,238 13.94 10.95 10.95 18.05 14.14 12.70 7.88 9.76 16.09 1.18 17.30 38.40

NT Russell 1000 Index Fund 2,373,684,532 13.94 10.95 10.95 18.05 14.34 N/A N/A N/A 16.31 N/A N/A N/A

R 1000 Index 10.96 10.96 18.11 14.43 12.93 6.15 8.97 16.43 1.50 16.10 28.43


NMSIC US Large Cap Enhanced Index Pool 530,386,565 3.11 11.70 11.70 20.60 N/A N/A N/A N/A N/A N/A N/A N/A

PanAgora Asset Management 530,386,565 3.11 11.70 11.70 21.13 N/A N/A N/A N/A N/A N/A N/A N/A

R 1000 Index 10.96 10.96 18.11 14.43 12.93 6.15 8.97 16.43 1.50 16.10 28.43



Asset Allocation & Performance - Composites & Managers


Performance shown is gross of fees, except for Credit & Structured Finance, Absolute Return, Real Estate, Real Asset, and Private Equity investments, which are shown net of fees. Performance is annualized for periods greater than one year. RVK endorses GIPS and calculates performance for composites and investment managers using different methodologies. For additional information, please see the Glossary. Fiscal year ends June 30.

Page 346




Allocation

MarketValue ($)

%

Performance (%)

QTD CYTD FYTD1

Year3

Years5

Years10

Years2012 2011 2010 2009

NMSIC US Small/Mid Cap Pool 792,776,193 4.65 11.85 11.85 22.84 12.62 12.79 5.73 11.15 13.70 -2.65 25.04 30.93

R 2500 Index 12.85 12.85 22.82 17.73 14.59 9.02 12.30 17.88 -2.51 26.71 34.39

IM U.S. SMID Cap Equity (SA+CF) Median 12.60 12.60 22.35 16.03 14.86 9.51 12.93 16.21 -1.54 26.33 36.36

Seizert Capital Partners 262,301,852 1.54 13.57 13.57 35.00 23.38 N/A N/A N/A 22.61 N/A N/A N/A

R Mid Cap Index 12.96 12.96 22.70 17.30 14.62 8.37 12.27 17.28 -1.55 25.47 40.48

IM U.S. Mid Cap Equity (SA+CF) Median 11.84 11.84 20.28 13.91 14.34 8.46 12.26 16.18 -1.54 24.66 37.79

Donald Smith & Company 270,146,919 1.59 8.92 8.92 27.61 19.33 N/A N/A N/A 19.90 N/A N/A N/A

R 2000 Value Index 11.63 11.63 21.76 18.09 12.12 7.29 11.29 18.05 -5.50 24.50 20.58

IM U.S. Small Cap Value Equity (SA+CF) Median 12.56 12.56 23.18 18.09 14.11 9.78 13.45 17.59 -3.26 27.77 34.28

Cortina Asset Management 260,327,422 1.53 13.25 13.25 13.50 4.22 N/A N/A N/A 7.72 N/A N/A N/A

R 2000 Growth Index 13.21 13.21 19.22 14.52 14.75 9.04 11.61 14.59 -2.91 29.09 34.47

IM U.S. Small Cap Growth Equity (SA+CF) Median 13.01 13.01 19.18 13.50 15.78 9.66 12.68 14.67 -1.83 29.04 37.86

NMSIC US Small/Mid Cap Index Pool 58,694,861 0.34 9.60 9.60 N/A N/A N/A N/A N/A N/A N/A N/A N/A

NT Russell 2500 Index Fund 58,694,861 0.34 9.60 9.60 N/A N/A N/A N/A N/A N/A N/A N/A N/A

R 2500 Index 12.85 12.85 22.82 17.73 14.59 9.02 12.30 17.88 -2.51 26.71 34.39


NMSIC US Small/Mid Cap Enhanced Index Pool 264,356,928 1.55 12.78 12.78 N/A N/A N/A N/A N/A N/A N/A N/A N/A

BlackRock Alpha Tilts 264,175,637 1.55 12.79 12.79 24.27 19.68 N/A N/A N/A N/A N/A N/A N/A

R 2000 Index 12.39 12.39 20.48 16.30 13.45 8.24 11.52 16.34 -4.18 26.86 27.18



Page 447




Allocation

MarketValue ($)

%

Performance (%)

QTD CYTD FYTD1

Year3

Years5

Years10

Years2012 2011 2010 2009

International EquityNMSIC Non-US Equity Composite 2,461,625,926 14.45 2.44 2.44 15.70 5.26 3.73 -0.16 11.83 16.27 -14.99 12.13 56.12

MSCI ACW Ex US Index (Net) 3.17 3.17 17.29 8.36 4.41 -0.39 10.93 16.83 -13.71 11.15 41.46

NMSIC Non-US Developed Markets Equity Pool 1,486,874,701 8.73 5.19 5.19 19.91 11.65 6.15 -0.54 8.97 17.61 -11.38 9.74 29.00

Alliance Bernstein MSCI EAFE Int'l Index 1,486,232,863 8.73 5.19 5.19 19.77 11.51 5.57 -0.61 7.05 17.53 -11.44 8.42 31.40

MSCI EAFE Index (Net) 5.13 5.13 19.80 11.25 5.00 -0.89 9.69 17.32 -12.14 7.75 31.78

IM International Large Cap Core Equity (SA+CF) Median 4.92 4.92 19.89 12.11 6.84 0.45 11.06 19.08 -12.00 11.12 32.40

NMSIC Non-US Emerging Markets Equity Pool 974,751,226 5.72 -1.48 -1.48 9.85 -2.96 -0.62 -0.70 18.21 14.10 -21.95 15.17 101.57

Alliance Bernstein Emerging Markets Index 974,751,226 5.72 -1.48 -1.48 N/A N/A N/A N/A N/A N/A N/A N/A N/A

MSCI Emg Mkts Index (Net) -1.62 -1.62 11.91 1.96 3.28 1.09 17.05 18.23 -18.42 18.88 78.51

IM Emerging Markets Equity (SA+CF) Median 0.32 0.32 14.62 5.31 4.74 2.00 18.21 20.06 -18.63 21.27 79.73

Fixed Income

NMSIC Fixed Income Composite 4,027,548,162 23.65 1.36 1.36 7.95 10.90 10.48 6.60 4.64 12.78 6.65 17.12 4.74

Fixed Income Custom Index 0.03 0.03 1.90 0.12 5.04 3.05 1.93 0.69 6.25 10.89 6.04

NMSIC US Core Bonds Pool 3,360,180,505 19.73 0.76 0.76 6.20 9.06 8.09 6.16 5.52 11.29 4.92 11.07 -0.33

Barclays US Agg Bond Index -0.12 -0.12 1.68 3.77 5.52 5.47 5.02 4.21 7.84 6.54 5.93

PIMCO Barclays US Universal 1,650,425,023 9.69 0.96 0.96 6.26 9.11 N/A N/A N/A 11.44 N/A N/A N/A

Prudential Barclays US Universal 856,732,369 5.03 0.81 0.81 6.47 9.23 N/A N/A N/A 11.23 N/A N/A N/A

Loomis Sayles Barclays US Universal 847,386,054 4.98 0.32 0.32 5.49 8.48 N/A N/A N/A 10.77 N/A N/A N/A

Barclays US Unv Bond Index 0.08 0.08 2.67 4.72 6.01 5.86 5.41 5.53 7.40 7.16 8.60

IM U.S. Broad Market Core + Fixed Income (SA+CF) Median 0.37 0.37 4.28 6.43 7.24 7.26 6.13 7.94 7.46 8.97 14.90

NMSIC Credit & Structured Finance Pool 667,367,657 3.92 4.48 4.48 16.63 19.98 21.76 8.91 N/A 19.67 16.03 46.02 37.65

Credit & Structured Finance Benchmark 0.79 0.79 3.03 -13.00 2.60 -8.56 N/A -12.07 -2.18 31.02 4.64

NMSIC Cash Equivalent Composite 84,206,693 0.49 0.71 0.71 0.71 0.71 1.11 1.10 2.48 0.00 2.52 0.20 0.56

BofA ML 3 Mo US T-Bill Index 0.02 0.02 0.09 0.12 0.11 0.34 1.75 0.11 0.10 0.13 0.21


Page 548




Allocation

MarketValue ($)

%

Performance (%)

QTD CYTD FYTD1

Year3

Years5

Years10

Years2012 2011 2010 2009

Absolute ReturnNMSIC Absolute Return Composite 1,034,725,710 6.08 3.53 3.53 6.72 6.45 2.90 0.35 N/A 6.48 -3.93 4.65 11.43

Mariner Matador, LLC 333,230,426 1.96 5.12 5.12 8.67 7.71 2.64 2.87 N/A 6.01 -5.34 3.99 10.37

AAM High Desert Fund 318,872,986 1.87 4.54 4.54 10.03 9.32 N/A N/A N/A 10.31 -3.98 N/A N/A

Crestline Enchantment Fund Class A 304,016,196 1.78 1.89 1.89 3.40 3.75 2.58 0.03 N/A 3.84 -1.52 6.03 11.09

Crestline Enchantment Fund Class B 48,508,123 0.28 -0.40 -0.40 0.20 1.22 3.64 -0.54 N/A 3.54 0.71 9.10 5.37

Crestline Offshore Recovery 12,943,397 0.08 2.05 2.05 2.44 3.79 6.82 N/A N/A 5.35 -3.07 17.82 N/A

Austin Capital Safe Harbor QP Fund 10,700,814 0.06 0.00 0.00 -2.30 -2.39 -8.77 -7.21 N/A -2.27 -16.86 -5.06 14.28

CT Preferred Investors Management LLC 6,062,878 0.04 0.00 0.00 0.85 -0.69 1.90 -3.73 N/A 2.85 0.21 3.76 10.15

Altair Stars LTD Class ZII US 201,095 0.00 0.00 0.00 0.00 0.00 -14.93 -13.11 N/A 0.00 -33.13 -9.92 8.79

ARS Pool (Cash Account) 189,796 0.00 1.10 1.10 1.10 1.10 0.38 0.50 N/A 0.00 0.00 -0.30 0.37

HFRI FOF Comp Index 3.35 3.35 7.25 4.77 2.10 -0.24 3.85 4.79 -5.72 5.70 11.47

Private Equity

NMSIC Private Equity Composite (Ex. State) 1,598,086,150 9.38 2.19 2.19 6.91 11.80 11.20 4.77 8.55 14.86 10.03 11.02 -11.25

Private Equity Pooled Funds 1,597,885,904 9.38 2.19 2.19 6.93 13.52 N/A N/A N/A 16.22 N/A N/A N/A

80/20 Cambridge PE Index (Lagged 1 Qtr) 3.00 3.00 6.85 12.45 14.30 5.55 13.40 14.12 15.20 16.36 -9.94

Venture Econ All Prvt Eq Index (Lagged 1 Qtr) 1.73 1.73 5.66 11.12 12.91 5.36 12.49 14.42 12.02 15.85 -6.71

Real Estate

Townsend Reported Real Estate 862,722,938 5.07 1.89 1.89 5.59 8.01 7.62 -6.08 N/A 10.03 10.49 -6.53 -31.78

NCREIF ODCE Index (Net) (Lagged 1 Qtr) 2.08 2.08 7.06 9.79 13.31 -1.99 N/A 10.47 17.18 6.01 -35.70

NCREIF/Townsend Weighted Benchmark (Lagged 1 Qtr) 2.40 2.40 7.36 9.91 13.17 -3.94 N/A 10.40 17.36 3.10 -37.98

Real Asset

NMSIC Real Asset Pool 93,639,959 0.55 3.09 3.09 7.67 N/A N/A N/A N/A N/A N/A N/A N/A

Real Asset Custom Index 0.34 0.34 3.77 4.11 5.44 1.97 6.24 4.90 2.77 7.53 8.92


Page 649




Allocation

MarketValue ($)

%

Performance (%)

QTD CYTD FYTD1

Year3

Years5

Years10

Years2012 2011 2010 2009

ETINMSIC Economically Targeted Investments 54,119,170 0.32 0.15 0.15 -0.57 0.57 -2.05 -3.02 -0.65 -0.32 -2.12 -4.87 -0.73

BofA ML 3 Mo US T-Bill Index 0.02 0.02 0.09 0.12 0.11 0.34 1.75 0.11 0.10 0.13 0.21

Severance Tax State PE Program 203,629,235 1.20 -0.99 -0.99 3.57 12.45 8.02 -2.07 -4.25 13.11 11.39 2.37 -19.16

Cambridge VC Index (Lagged 1 Qtr) 1.15 1.15 2.33 7.10 11.30 3.55 6.62 7.54 20.66 8.66 -12.77

Venture Econ All Prvt Eq Index (Lagged 1 Qtr) 1.73 1.73 5.66 11.12 12.91 5.36 12.49 14.42 12.02 15.85 -6.71

NMSIC Total Fund Composite 17,032,469,164 100.00 4.93 4.93 12.08 9.77 8.95 4.36 7.84 14.26 -0.93 14.55 18.69

The Global Equity Custom Index consists of 70% R 3000 Index, 18% MSCI EAFE Index (Net), 12% MSCI Emg Mkts Index (Net).

The Large Cap Custom Index consists of the S&P 500 Index (Cap Wtd) through 6/30/2012 and the R 1000 Index thereafter.

Credit & Structured Finance Benchmark consists of 45% ABX.HE.BBB-06-1, 45% S&P/LTSA 1100 Names Index & 10% CDX 15 lagged by 1 month.

Absolute Return market values are lagged 1 month and provided by J.P. Morgan. Performance for Absolute Return is preliminary and shown as of the most current month end.

Historical performance for Crestline Enchantment Fund Class A shares prior to January 2011 consists of Crestline Partners LP. Class B shares before this date consists of Vintage Classic LLC.

Performance for Mariner Matador, LLC prior to August 2008 consists of Mariner Select LP.

80/20 Cambridge Private Equity Index is lagged 1 quarter and is a blend of 80% Cambridge Private Equity Index and 20% Cambridge Venture Capital Index.

Venture Economics All Private Equity Index is lagged 1 quarter.

NCREIF/Townsend Weighted Benchmark is calculated by Townsend, is lagged 1 quarter, and is a weighted benchmark based on the target allocation to each real estate sector using the investable universe.

Real Estate and Private Equity investments are lagged 1 quarter and assume a 0.00% return during interim months.

Real Asset investments assume a 0.00% return during interim months.

Real Asset Custom Index consists of 35% Barclays US Treasury: US TIPS Index, 25% Dow Jones-UBS Commodity Index, 20% NCREIF Timberland Index, and 20% Consumer Price Index + 3%.

R.V. Kuhns & Associates began calculating performance in May 2011 using data provided by J.P. Morgan. Historical performance prior to this date was provided by NEPC.


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june 2013 board book

Documents

secretary nm

deputy director

alfredo santistevan

approval of agenda

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chair iv

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