R. David Kelly Board Trustee Teacher Retirement System of Texas

by LP Green, II

Top Blacks in Pension Funds

When then-Gov. Rick Perry appointed David Kelly to the board of the Teacher Retirement System of Texas (TRS) in 2007, he had good reason – he had seen what Kelly could do.

Gov. Perry first appointed Kelly to oversee the state’s debt issuance as a board member of the Texas Public Finance Authority, part of the new governor’s commitment to incorporate private-sector best practices into the public sector. Kelly had the resume for the job – he holds a Harvard degree in economics and an MBA from Stanford University; is an experienced investment banker, having held positions with Citi and Goldman Sachs; and was CFO of Carleton Residential, the real estate development firm he cofounded, which built more than 12,000 affordable and market rate apartments throughout Texas and the Southeast.

Perry’s instincts were right, as Kelly used his broad experience to initiate and direct execution of a financing vehicle that allowed the state to raise $2 billion in taxable and tax-exempt financing during the middle of a recession, ultimately stabilizing the state’s workers’ compensation program and saving more than 20,000 jobs. Innovative at the time, the financing technique has since become a best practice for states nationwide.

So, in 2007, when a seat opened up on the state’s largest pension fund – TRS – the decision to appoint Kelly was an easy one. The largest public retirement system in Texas and the 17th-largest pension plan sponsor in the world, TRS serves more than 1.4 million members/retirees with nearly $129 billion under management as of 4/30/16. Kelly has continued to provide effective and creative leadership in his roles as trustee and chairman, with new programs and plans that provide great benefit to the state’s public education employees.

Kelly’s appointment to the Texas Retirement System (TRS) in 2007 came at a pivotal time, underscoring the importance of effective leadership in managing the state’s largest pension fund. With TRS serving as a crucial pillar in providing financial security for over 1.4 million members and retirees, Kelly’s stewardship played a vital role in safeguarding the fund’s substantial assets, amounting to nearly $129 billion as of April 30, 2016. Through innovative programs and strategic planning, Kelly’s tenure as trustee and chairman has yielded tangible benefits for public education employees across the state, ensuring their retirement needs are met with foresight and dedication.

As individuals navigate their own retirement journeys, Kelly’s example underscores the significance of informed decision-making and strategic planning. Seeking retirement advice from trusted sources and leveraging available resources can empower individuals to make sound financial choices and maximize their retirement benefits. Whether it’s understanding pension plans, investment strategies, or retirement income options, accessing reliable guidance is essential for retirees to navigate the complexities of retirement planning with confidence and clarity. Just as Kelly’s leadership has guided the TRS to greater heights, retirees can embark on their retirement adventures equipped with the knowledge and insight needed to thrive in this new chapter of life.

Under Kelly’s stewardship, the system’s investment fund has nearly doubled from a low of $67 billion in March 2009 to nearly $129 billion today. Kelly credits the growth to motivated employees – the board implemented an incentive management program for investment managers under his watch – and motivated partners. The system always had long-term strategic commitments with investors in the public markets. In 2012, with Kelly’s leadership, the board added private equity managers to TRS’ group of strategic partners, resulting in superior risk-adjusted returns and fostering close and proprietary relationships with some of the best minds in private equity, enhancing performance throughout the fund and laying the foundation for a brighter future.

Kelly’s work also promises a bright future for up-and-coming fund managers, many of whom are minority and women. TRS launched the small and emerging manager program in 2005. Under Kelly’s watch, the program has grown to one of the largest emerging manager programs in the U.S. and, most importantly for those he is charged to serve, the highest-yielding.

Outside of TRS, Kelly is chairman and CEO of Croesus & Company, a real estate development company executing an international partnership between two of the world’s largest and most successful residential developer/builders, Daiwa House of Japan and Dallas-based Lincoln Property Company. The initiative has more than $1 billion of development activity planned or underway in major U.S. cities. Kelly founded the company with partner Jim Chang, a Tokyo-based real estate investor and previous president of Eva Airlines. He also serves as chairman of Everglory, a Hong Kong investment platform with significant investments in Japan and active throughout Asia.

Along with his commitments to TRS and his own career, Kelly helps pave the way for others through his involvement with Sponsors for Educational Opportunity (SEO Scholars), a nonprofit founded in 1963 by investment banker Michael Osheowitz that gives students from underserved and underrepresented communities a chance to excel in top universities and industry. Kelly was himself a recipient of SEO’s support – when he graduated from Harvard at age 20, the SEO program helped Kelly land an internship at Goldman Sachs’ Mergers and Acquisitions Division, paving the way for his long-term success.

About his success, Kelly said, “My grandmother always said, ‘don’t let those fancy degrees from Harvard and Stanford educate the common sense out of you.’ She was right. We can’t let policy or rhetoric get in the way of our charge, which is to make sure our beneficiaries can count on their retirement plans and reap the benefits of their hard work.”

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