# ATRS Board Rules and Policies (FOIA Response 6-18-25) A production of twenty governance documents totaling approximately 180 pages: six Board Policies, thirteen ATRS Rules, and one Board Resolution. The materials together describe the legal and procedural framework governing every action of the ATRS Board, including the 6/2/2025 action approving Resolution 2025-22 to authorize up to $50 million in Israel Bonds purchases. The most consequential single fact in this batch is that Board Policy 4 (Statement of Investment Policy) was last amended on 6/2/2025, the same day as the Israel Bonds vote. The text of that amendment is not isolated in the production; the policy document carries the amendment history at its end without showing what was changed. The previous amendment to BP4 was 12/2/2024. ## Board Policies **Board Policy 1, Board Governance** (BoardPolicy_01.pdf, 11 pages, last amended 6/3/2024). Defines the 15-member Board (11 elected, 4 ex officio); election of Chair and Vice Chair; quorum (8 trustees); affirmative vote requirement (8); Robert's Rules of Order; FOIA-compliant open meetings. Section IV is the Trustee Code of Conduct, including conflict-of-interest provisions and the prohibition on contact with any firm "the Board is considering employing through a competitive procurement until after the procurement process has concluded." Section XII is the Investment Committee Charter (8 members: 5 Board appointees plus the Board Chair ex officio, plus the State Treasurer and State Bank Commissioner). Section XIII is the Operations Committee Charter (membership including the State Auditor and Secretary of Education). Section XIV is the Audit Committee Charter (5 members: 3 Board members plus 2 independent at-large members). **Board Policy 2, Board Objectives** (BoardPolicy_02.pdf, 5 pages, last amended 9/30/2024). Sets financial, membership, governance, and staff objectives. Investment objective: "achieve, over a period of years, the greatest rate of return for the System with due consideration being given to preserving capital and its purchasing power" while maintaining "an appropriate level of risk consistent with the obligations of a prudent investor." Section IV(6): "Promote knowledge-based decision-making. The goal is for management decisions to be based on facts and expert opinions." **Board Policy 3, Executive Director** (BoardPolicy_03.pdf, 10 pages, last amended 9/25/2023). Defines the Board to ED relationship, ED job description, monitoring methods (Internal Report, External Report, Direct Board Inspection), and ED Limitations. Code of Ethics requires that all employees adhere to a code that ensures "No conflict of interest, or appearance thereof, with respect to their fiduciary responsibilities" and "No solicitation or acceptance of gifts, favors, or other items of value as defined by the Arkansas Ethics Commission." Risk Management Section II.F.3.f requires "Transfer of securities to the State Treasurer or the Treasurer's designated subcustodian for safekeeping," which underlies the State Street custody arrangement. **Board Policy 4, Statement of Investment Policy** (BoardPolicy_04.pdf, 14 pages, last amended 6/2/2025). The central investment governance document. Section A.5 contains the written-recommendation requirement: "No investment shall be made without an investment consultant's written advice or written recommendation. The System shall not approve any material changes in any direct investment without first receiving written advice or a written recommendation from a third-party investment consultant and, if needed, outside legal counsel, and, without thereafter receiving written approval by the Investment Committee and Board." Section D.3 contains the pecuniary fiduciary standard. Section E sets asset allocation (Total Equity 48% target with 43-53% range; Fixed Income 20% target with 17-23% range; Opportunistic/Alternatives 5%; Real Assets 15%; Private Equity 12%; Cash Equivalents 0% with 0-5% range). Section S (Roles) makes the Executive Director and investment consultant "jointly responsible for the initial selection of investment managers and any increase or decrease in an investment manager's funding." Section T (Proxies) contains the detailed pecuniary proxy voting requirements that drove the Egan-Jones Proxy Services contract referenced in the May 22 Board preview email. Section B addresses divestment from the Treasurer's anti-BDS list under Ark. Code § 25-1-1002. Section C addresses Act 937 of 2025 prohibitions on PRC and Treasury-restricted-entity holdings. The amendment history at the end shows the policy was amended 12/2/2024 and again 6/2/2025. **Board Policy 5, Private Equity Investment Policies** (BoardPolicy_05.pdf, 6 pages, last amended 2/3/2020). Target 12% of total assets. Minimum commitment $10 million per fund. Cap of 35% of total fund raised. Benchmark: Dow Jones U.S. Total Stock Market Index plus 200 basis points over a market cycle (approximately ten years). Categories: venture capital, buyout and growth, mezzanine debt, distressed debt and turnaround. Geographic target: 80-100 percent U.S. and Western Europe. Final authority to make commitments is vested solely in the Board. **Board Policy 6, Real Assets Investment Policies** (BoardPolicy_06.pdf, 8 pages, last amended 12/2/2024). Total Real Asset target 15 percent (Real Estate 8 percent, Timber 2 percent, Agriculture 1 percent, Infrastructure 4 percent). Benchmarks: NCREIF Fund Index NFI-ODCE for Real Estate; NCREIF Timberland Property Index for Timber; NCREIF Farmland Index for Agriculture; CPI plus 500 basis points for Infrastructure. Single Real Asset manager limited to 30 percent of Real Asset target allocation. Individual investment generally limited to 10 percent of overall Real Asset allocation. ## ATRS Rules The thirteen Rules are mostly operational. The summaries below identify what each addresses; substantive content most relevant to investment governance is in Board Policies 1 through 4. **Rule 1, Rules of Organization and Operation** (3 pages, effective 7/7/2024). Confirms ATRS is a "cost-sharing multiple-employer, defined benefit pension plan established on March 17, 1937" and operates as a qualified trust under 26 U.S.C. § 401(a). The 15-member Board has eleven elected and four ex officio members. **Rule 4, Election of Board of Trustees** (8 pages, effective 7/7/2024). Specifies the eleven elected positions: four active member trustees by congressional district, two active administrator trustees, one nonlicensed trustee, one minority trustee, three at-large retired member trustees. Six-year terms, ballots mailed by March 15, results certified by April 20. Vacancies may be filled by Board appointment or special election. **Rule 6, Membership and Employer Participation** (17 pages, effective 7/7/2024). Defines reciprocal systems including APERS, ASHERS, ASPRS, LOPFI. Documents which employers participate in ATRS and how they enroll. Operational. **Rule 7, Service Credit, Contributions, and Reporting** (9 pages, effective 7/7/2024). Member contribution rate floor 6 percent, raised by Board to maintain actuarial soundness. Public school employer rate up to 14 percent. State pays additional employer contributions for state agency covered employees. Operational. **Rule 8, Free Service Credit, Purchasable Service Credit, and Purchase Accounts** (13 pages, effective 7/7/2024). Free military service credit; purchasable categories include domestic federal, out-of-state, overseas, General Assembly, advanced degree, private school, federal retirement, gap year, and contract buyout service. Operational. **Rule 9, Retirement and Benefits** (21 pages, effective 7/7/2024). Eligibility requirements, application windows, annuity options (straight life, Option A 100 percent survivor, Option B 50 percent survivor, Option C ten years certain), final average salary calculations using five highest years, error correction with five-year look-back period. Operational. **Rule 10, Return to Service and T-DROP** (10 pages, effective 7/7/2024). Teacher Deferred Retirement Option Plan (T-DROP) participation rules; T-DROP plan deposits and interest; Cash Balance Account program with tiered interest rates. Operational. **Rule 11, Survivors and Domestic Relations Orders** (16 pages, effective 7/7/2024). Surviving spouse and dependent child annuities, lump-sum death benefits up to $10,000, qualified domestic relations orders, alternate payee provisions. Operational. **Rule 12, Protection of Qualified Trust Status** (1 page, effective 7/7/2024). Authorizes Executive Director to interpret rules consistently with IRC 401(a) requirements and to void any conflicting provisions. **Rule 13, Administrative Adjudications and Manifest Injustice Referrals** (13 pages, effective 7/7/2024). Member appeal procedures including staff determination letters, executive director review, hearing officer assignment, and Board final orders. Manifest Injustice Committee composition (General Counsel plus two senior management designees) and authority. Operational. **Rule 14, Retirement Fund Asset Accounts** (1 page, effective 7/7/2024). Establishes five accounts: Members' Deposit, Employer Accumulation, Retirement Reserve, Income-Expense (in which "all investment income is reported and from which interest credits and other expenses of the board are reported"), and T-DROP. **Rule 15, Benefit Restoration Plan and Trust** (7 pages, effective 7/7/2024). The IRC 415(m) "qualified governmental excess benefit arrangement" providing benefits that exceed IRC 415(b) caps. Separately funded outside the main retirement fund. Operational. **Rule 16, CASH Program** (3 pages, effective 7/7/2024). Operational rule for the Cash and Savings Help (CASH) Program implementing Ark. Code § 24-7-505 buyout offers to inactive vested members. ## Resolution 2024-33 **Resolution 2024-33, Extension of ATRS CASH Program for Fiscal Year 2025** (4 pages, image-only PDF requiring OCR). Adopted September 2024 (specific day redacted in OCR). Establishes the FY2025 CASH Program offering period from October 1, 2024, through June 30, 2025. The program offers inactive vested members a one-time lump-sum cash payment in lieu of waiting for monthly retirement benefits. The CASH Program payment is calculated as the higher of (a) 30 percent of the assumed current value of the assumed monthly benefit, or (b) the member's contributions plus interest multiplied by an eligibility-tier factor (101 percent in year one, 102 percent year two, 105 percent year three, 110 percent year four and beyond). The OCR for the Accrued Liability Factor Table did not capture the actual tabular values; the underlying file would need to be re-OCR'd at higher resolution if the table is required. This resolution is not directly related to the Israel Bonds investigation but documents contemporaneous Board policy work in the same fiscal-year window. ## What this batch establishes for the investigation The Board Rules and Policies establish the regulatory backdrop against which the 6/2/2025 Israel Bonds vote occurred. Four observations matter for the investigation. First, Board Policy 4 was amended on the same day as the Israel Bonds vote. The amendment text is not in this production. This is a priority follow-up FOIA target. Whether the amendment changed the written-recommendation requirement, the standard of care, the asset allocation, the proxy voting language, the divestment list provisions, or the countries-of-concern language is unknown from the documents in this batch. The text of the policy in this batch reflects the post-amendment state. Second, BP4 Section A.5 establishes a written-recommendation requirement for "any material changes in any direct investment." The Aon engagement framing in the May 8 White directive ("they will not be making a formal recommendation") is in tension with this requirement. Whether Aon ultimately produced written advice or a written recommendation, and whether such a document was provided to the Investment Committee, is not established in this batch and is a priority follow-up FOIA target. Third, the Investment Committee membership rules show that the State Auditor is not a statutory member of the Investment Committee. The Investment Committee includes the State Treasurer and State Bank Commissioner ex officio. Auditor Milligan is a statutory member of the Operations Committee, not the Investment Committee. He nonetheless voted on the Israel Bonds investment as a full Board member at the 6/2 meeting after his office initiated the proposal. The structural conflict captured in [[board-colleague-conflict]] is sharpened, not resolved, by this distinction. Fourth, the trustee Code of Conduct in BP1 Section IV specifically prohibits trustees from having "any contact with an individual or anyone associated with a firm that the Board is considering employing through a competitive procurement until after the procurement process has concluded." The 4/15/2025 in-person meeting between Auditor Milligan and DCI representatives Lawrence Berman and Brad Young occurred before the Board's procurement of Reams Asset Management as the Israel bond manager. Whether DCI is "the firm" being procured (the bonds being bought are issued by DCI; the manager being hired is Reams) is a question the Code does not resolve unambiguously. ## Documents referenced but not in this batch The 6/2/2025 amendment text for BP4. The Investment Committee minutes from the 6/2 meeting that would document the rationale for the BP4 amendment. Any written advice or written recommendation provided by Aon to satisfy the BP4 Section A.5 requirement. The procurement record for Reams Asset Management (whether the contracting was by competitive procurement or by exception). The Egan-Jones Proxy Services contract referenced in the 5/22 Board preview email. ## Evidence > "No investment shall be made without an investment consultant's written advice or written recommendation. The System shall not approve any material changes in any direct investment without first receiving written advice or a written recommendation from a third-party investment consultant and, if needed, outside legal counsel, and, without thereafter receiving written approval by the Investment Committee and Board." > Board Policy 4 Section A.5, BoardPolicy_04.pdf p.1-2 > "Each party serving in a fiduciary capacity for the trust shall discharge his or her duties solely in the pecuniary interest of the participants and beneficiaries and in compliance with Arkansas Code § 24-2-801 et seq. A fiduciary's evaluation of an investment, or evaluation or exercise of any right appurtenant to an investment, shall take into account only pecuniary factors." > Board Policy 4 Section D.3, BoardPolicy_04.pdf p.3 > "Amended December 2, 2024 / Amended June 2, 2025" > Board Policy 4 amendment history, BoardPolicy_04.pdf p.13-14 > "All trustees, as fiduciaries, shall discharge their duties solely in the best interest of ATRS members and for the exclusive purpose of providing optimum benefits." > Board Policy 1 Section IV(b)(1), BoardPolicy_01.pdf p.3 > "Trustees shall decline any offer and shall not have any contact with an individual or anyone associated with a firm that the Board is considering employing through a competitive procurement until after the procurement process has concluded." > Board Policy 1 Section IV(e), BoardPolicy_01.pdf p.3 > "The two (2) paramount considerations in fund investment are safety and yield, with yield being of first importance, provided such investments comply with legally mandated safeguards." > Board Policy 1 Section III(b)(2), BoardPolicy_01.pdf p.2 > "There is established an Investment Committee that shall be composed of eight (8) members... The remaining two (2) members of the Investment Committee shall be the State Treasurer and the State Bank Commissioner upon their respective acceptance of their appointment." > Board Policy 1 Section XII(a)(1)(3), BoardPolicy_01.pdf p.8 > "The remaining two (2) members [of the Operations Committee] shall be the State Auditor and the Secretary of Education upon their respective acceptance of their appointments." > Board Policy 1 Section XIII(a)(3), BoardPolicy_01.pdf p.8 > "The Executive Director and investment consultant are jointly responsible for the initial selection of investment managers and any increase or decrease in an investment manager's funding." > Board Policy 4 Section S, BoardPolicy_04.pdf p.11-12 ## Cross-References [[atrs-foia-r1-staff-emails]] companion source page on the staff email production from the same FOIA [[atrs-investment-policy-bp4]] concept page on Board Policy 4 in detail [[written-recommendation-requirement]] concept page on the BP4 Section A.5 requirement [[atrs-board-governance-structure]] concept page on Board composition and committees [[trustee-fiduciary-and-conflict-rules]] concept page on the Code of Conduct [[safety-and-yield-doctrine]] concept page on BP1 Section III(b)(2) [[independent-credit-analysis-gap]] [[pecuniary-frame-act-498]] [[atrs-resolution-2025-22]] [[board-colleague-conflict]] companion concept pages from the staff email batch, updated to incorporate this batch's findings