HomeMy WebLinkAboutRetirement Committee - Minutes - 07/10/2003City of Fort Collins
COUNCIL
LIAISON:
COMMITTEE
MEMBERS
PRESENT:
MEMBERS
ABSENT:
General. _A
Retirement Plan
GENERAL EMPLOYEES' RETIREMENT COMMITTEE
July 10, 2003, MEETING MINUTES
Mayor Ray Martinez
Susan Lehman, Chair, 221-6813
Michele Hays -Johnson, 416-2158
Bill Switzer, Vice Chair, 221-6713
None
Approved September 11, 2003
Jim O'Neill, 221-6779
Dottie Nazarenus, 204-4429
Alan Krcmarik, 221-6788
OTHERS Pat Kahle (Actuary, Milliman USA)
PRESENT: Greg Tempel (City Attorney)
Debbie Weedman (Human Resources)
Julie Depperman & Ann Wardle (Finance)
CALL TO ORDER: Susan Lehman called the meeting to order at 1:40 p.m. All
members of the Committee were present.
PLAN MEMBER COMMENTS: The Committee reserves this place on the agenda to
receive comments from Plan Members or the public.
A Plan Member attended the meeting to discuss her concerns about the Full-
Time/Part-Time Plan change. Although all Board members had received copies of her
email stating her concerns, Susan distributed copies of the memo dated June 12,
2003. The Member also distributed a copy of a handout prepared by her husband that
illustrated three hypothetical examples of benefit calculations.
Alan Krcmarik provided background. The Committee had proceeded with the Plan
change in order to make Plan benefits more equitable with Plan contributions. This
change was approved by City Council on June 17, 2003 following many years of
review and work by the Committee, staff, Plan actuaries and outside pension
attorneys.
The Member stated that she worked a lot of hours that are not covered under the
Plan's definition of "Compensation". Therefore, under the Plan change, she would not
earn credited service for that time worked and her benefit would be reduced. The
Member said that she had given extra time over the years, had done a good job, and
21Fi%kutkN2W-4kiCfMtbkO7200STIDT'tNLPO. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
General Empl—e's Retirement Committee
Jury 11, 2003, Meeting Minutes
Page 2 of 4
was working with the understanding that she had accumulated a pension and that it
would now be reduced by 25%. The Member said that she realized that the extra
time she did give could be considered volunteer time but that she did so believing she
had a given pension amount. The Member said that the benefit information she was
given was correct and that she knew the discussion over the Plan change had been
ongoing but did not recall receiving a notice informing her of the times and dates of
the open houses. She contacted both Dottie Nazarenus and Susan to discuss her
concerns.
Julie Depperman explained to the Member that she can never receive less than the
benefit she had accrued as of June 30, 2003 under the Plan then in effect and that
those accrued benefits could not be taken away from her. Julie showed the Member
her personal calculation and memo that was provided to her in February 2003
depicting the projected June 30, 2003 benefit under the current Plan and the benefit
calculated using the proposed Plan change. Julie told her that the memo discussed
the timing of the open houses, explained that Members were vested in their accrued
benefit as of June 30, 2003 and that they could not receive less than that amount.
Greg Tempel said that he also had a conversation with the Member's husband and
that this was what he attempted to explain to him. The Member said that prior to this
meeting they did not fully understand the accrued benefit concept.
The Member will make an appointment for her and her husband to meet with Alan and
Julie to go over the changes in more detail.
Bill Switzer said that he has had Members ask that the Committee protect Plan
benefits from the City-wide budget cuts and that if Plan benefit cuts are suggested,
that it should be considered as a retirement benefit reduction and , as such, should be
done across the board and impact all employees' retirement benefits equally. Alan
said that within the budget process the City is looking at another $3.3 million in cuts
for 2004 and that employees' salaries are frozen for another two years. Pat Kahle
said that the salary freeze will result in gains for the Plan.
APPROVAL OF MINUTES: Minutes of the June 5, 2003, meeting were distributed.
Jim O'Neill moved approval of the minutes, and Bill Switzer seconded the motion. The
Committee approved the minutes unanimously (6-0).
DISCUSSION TOPICS
1. Plan Philosophy: Alan asked if the Actuary thought there was anything the
Committee should look at regarding Plan philosophy. Pat thought the Committees'
focus should remain on the Plan's funding needs and see how the stock and bond
markets perform this year. Pat was asked to let the Committee know if anything
comes across her desk that would affect the Plan. Pat distributed copies of a
newsletter Milliman USA puts together that focuses on the public arena; she
suggested that the Board review it. Pat will make sure that all Board members and
staff receive an electronic copy of the newsletter in the future.
Bill asked if the Actuary could let the Committee know when there is a significant
negative impact to the Plan based on Plan Member changes (salary, mortality,
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Ju.y 11, 2003, Meeting Minutes
Page 3 of 4
retirement dates), market conditions, etc. Pat explained that Milliman USA only runs
the Plan data through their models once a year which is the basis for the Actuarial
Report. Pat said the three years of declines in the stock market was not something
they could have predicted but that the market presently going up is a positive. Bill
said it is unrealistic to believe that the market would go up enough to not need
additional cash infusions from the City.
The Committee agreed that the Plan should be posted on the web site. Susan said
that Members will be given sufficient notice of the Plan posting by reading the meeting
Minutes.
2. Status on Proposed Part -Time Plan Change: Julie said that they are updating
the Access database to incorporate the part-time/full-time Plan changes.
3. Asset/Liability Modeling: Pat provided a two -page handout on Milliman USA's
projection model. Julie and Alan are also checking with other companies on the
modeling.
4. Quarterly Investment Update: Julie distributed the Plan's Investment Report
for the quarter ended June 30, 2003. She said these were the best mutual fund
returns since March 2000. The market value of the Plan was about $30.8 million,
which is an increase of almost $2 million since December 31, 2002. The year-to-date
return was 6.69%. The portfolio allocations remain at 60% mutual funds and 40%
fixed income securities. Julie indicated that with interest rates at a 45-year low, it is
difficult to find high yielding fixed income securities and that cash is being reinvested
at the current low market rates.
Economists are projecting the U.S. economy to grow at a 3.5% rate in the September
2003 quarter. Some of the factors expected to fuel the growth include: tax
incentives, the end of the war with Iraq, consumers having more funds due to
refinancing, and the increase in manufacturing due to low inventories. Interest rates
are projected to remain at their low levels while the outlook for equities is uncertain.
Julie and Alan met with investment brokers last week to discuss alternative
investments, market conditions and asset allocation strategies. They suggested to the
Committee that it may be an opportune time to reposition some of the Plan's assets.
S. Other Business: Alan asked Dottie and Michele Hays -Johnson if they received
letters about the expiration of their terms as Board members. They will both need to
contact Karla Smith if they want to reapply for the Board. Board members are limited
to eight years, which neither of them are affected by.
The Committee discussed canceling the August meeting and postponing the meeting
scheduled for September. Susan Lehman moved that the August meeting be canceled
and that the September 4 meeting be moved to September 11; Dottie Nazarenus
seconded the motion. The motion passed unanimously (6-0). The postponement and
cancellation will be posted.
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)u.y 11, 2003, Meeting Minutes
Page 4 of 4
Adjournment: There being no further business, the Committee adjourned at about
3:00 p.m.
TOPICS FOR NEXT REGULAR MEETING
The next regular meeting of the Committee will be on September 11, 2003, at 1:30
p.m. in the Council Information Center of City Hall. There will be a 15-minute
variance from the usual meeting time of 1:15. The tentative agenda includes:
Plan Member Comments
Approval of Minutes
Plan Philosophy
Part -Time Plan Change Comments
Monthly Investment Update
Other Business
GENERAL EMPLOYEES' RETIREMENT PLAN WEB PAGE: The General Employees'
web page can be found at www.fcgov.com/city clerk. The Committee's 2002 Annual
Report, 2003 Work Plan, and monthly minutes are available at this site.
2003 Meeting Schedule:
The regular meeting time for the Committee is at 1:15 p.m. on the first Thursday of
each month. The regular location is the Council Information Center at City Hall. For
2003, the Committee has scheduled the meetings as shown below:
3ai uary9 ApFil 3 guly 19 October 2
February C May 1 August 7 (canceled) November 6
Mareh 6 gune 5 September 11 (postponed December 4
from September 4)
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