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HomeMy WebLinkAboutRetirement Committee - Minutes - 05/01/2003City of Fort Collins COUNCIL LIAISON: General nmvlovees Retirement Plan GENERAL EMPLOYEES' RETIREMENT COMMITTEE May 1, 2003, MEETING MINUTES Mayor Ray Martinez Approved June 5, 2003 COMMITTEE Susan Lehman, Chair, 221-6813 Dottie Nazarenus, 204-4429 MEMBERS Michele Hays -Johnson, 416-2158 Jim O'Neill, 221-6779 PRESENT: Bill Switzer, Vice Chair, 221-6713 Alan Krcmarik, 221-6788 OTHERS Pat Kahle (Actuary, Milliman USA)�k PRESENT: Greg Tempel (City Attorney) I Debbie Weedman (Human Resources) Julie Depperman & Ann Wardle (Finance) CALL TO ORDER: Susan Lehman called the meeting to order at 1:24 p.m. With all members present, the Committee established a quorum. PLAN MEMBER COMMENTS: The Committee reserves this place on the agenda to receive comments from Members of the Plan or the public. Alan Krcmarik asked if Committee members had received any further comments from Plan Members regarding the Full-Time/Part-Time proposed Plan change; no comments have been received. Based on a request from the City Manager, the Committee has scheduled the proposed Plan change for consideration before Council on June 17. APPROVAL OF MINUTES: Minutes of the April 3, 2003, meeting were distributed. Some minor changes were suggested. Bill Switzer moved the minutes be adopted as corrected, and Jim O'Neill seconded the motion. The Committee approved the minutes as corrected unanimously (6-0). DISCUSSION TOPICS 1. Plan Philosophy: There were no comments on Plan Philosophy. 2. Status on Proposed Part -Time Plan Change: Alan reported that the Agenda Item and Resolution have been prepared and are ready to be presented to City Council. Alan attached the memo which went to all Plan Members describing the Plan change. The City Clerk asked if the Committee would like to include the meeting minutes that discuss the proposed change in the Council packet. The Committee agreed to add the minutes where the motion was approved to proceed with the Plan change. Several members of the Committee indicated that they may attend the Council meeting in support of the proposed Plan change. Ann Wardle will post the 90PJtW?>WffiiP?l- PO. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 General E loyees' Retirement Committee May 1, 2003, Meeting Minutes Page 2 of 4 Council date as a Plan meeting date in case the number of Committee members attending constitutes a quorum. 3. Monthly Investment Update: Julie Depperman distributed a handout of the Plan Investment Report for the quarter ended March 31, 2003. There was a year-to- date market loss for the Plan of 2.7%. The market value of the Plan on March 31, 2003, was $28,060,608. The war with Iraq has been negatively impacting the economy and the stock markets. Julie also provided an updated Plan investment report as of April 30, 2003. The report shows that the market value loss through March has been erased and that the Plan currently shows a gain of 2.21% year to date. The market value of the portfolio increased to $29,226,687. She distributed and reviewed the mutual fund quarterly compliance analysis as of March 31, 2003. Alan discussed the use of alternative investment vehicles including hedge funds, real estate investment trusts and overseas debt funds to further diversify the Plan investments. He asked Pat Kahle what other clients of Milliman USA are investing in during this time of low interest rates and depressed stock markets. Pat said that real estate is not uncommon, but that emerging funds and hedge funds are less common due to their higher risk. Pat said that there are pooled real estate investments both in mortgages and equities. This would be one more way to diversity. Alan said the Committee would have to amend the Plan investment policy in order to invest in these types of products. Alan said he and Julie attended a pension investment conference and saw a demonstration of dynamic asset/liability modeling in which assumptions could be changed and results could be seen immediately. Pat said Milliman USA can also do that type of modeling. She is currently in the process of modeling another client's portfolio and suggested that after she has completed that process, she could model the Plan's portfolio relationship to the plan's liabilities. She will bring an example of the model to the next meeting along with the types of assumptions used in the modeling. She can bring the model to a Plan meeting and the Committee can change assumptions and view results during the meeting. Julie asked that Pat let the Committee know what the key assumptions are so that they can think about it ahead of time. Pat said she would need time to estimate the cost of doing modeling and would provide this cost estimates the next meeting. Alan thought it would make sense to show how we were once in a very strong financial situation a few years ago and how it has changed. He thinks 25-30 years to gain back the losses is not unreasonable. Jim passed out a flyer on a property for sale by the City. This Utilities Wastewater enterprise owns the property. Alan said they could rent the water rights, which are valuable. Michele questioned why the property was abandoned as a sludge disposal site and suggested a soil analysis for metals contamination would be necessary before consideration for purchase. Alan volunteered to study the possibility of purchasing this property as an investment for the Plan. Greg Tempel pointed out that the Committee should consider the costs and the management associated with owning a property. Filename: 2003 GMIN May 059193RevisedDrft General E loyees' Retirement Committee May 1, 2003, Meeting Minutes Page 3 of 4 4. Other Business: The Committee and staff support provided comments to Pat about the Actuarial Report. She will change Table 6 by removing any Members' names, and make other minor changes to a couple of other tables. Pat said before the report can be posted on the City's website, she needs to include some standard disclaimer language. Debbie Weedman reported that a Plan Member died on April 9. On April 7, Debbie talked to him on the phone and told him that his beneficiary would only receive 470/0 of his actuarial equivalent benefit if he died and did not roll his funds over into an outside qualified plan. The Member died before the paperwork was filed. Greg said the Member's intentions are not official until the paperwork has been signed and filed. Greg said the Committee has to follow the provisions of the Plan and that the Member died without choosing an option in writing. If the Committee chose to change a Plan provision, the change would need to go before Council. Alan provided an example of a similar situation that occurred a few years ago. He recommended that the Committee needs to follow the Plan and that there is a danger when exceptions are made for one individual. Bill agreed that the right decision is the legal one. While the entire Committee felt empathy and expressed their concern for the family's situation, the Committee determined that the appropriate action is to follow the provisions of the Plan. Alan moved the Committee deny the request to base a retirement distribution on verbal instructions as Debbie outlined and said the Committee expressed its sincere condolences but cannot act outside of the Plan. Bill seconded the motion, which passed unanimously (6-0). S. Review of Actuary: The Committee is required to review the performance of the Plan's actuary on an annual basis. Alan asked Pat if she had any comments on the relationship between Milliman USA and the Committee and whether there is anything the Committee could improve upon. Pat said she has never seen a municipality conduct monthly meetings, the norm is quarterly or annual meetings. Pat also noted that she has not experienced any barriers in getting the information required to complete projects assigned to the actuary, such as the Actuarial Report and the Personal Retirement Planning Statements. Pat left the meeting at about 3:15 p.m. Jim said he will not be at the June 5 meeting but that the Committee needs to determine if it wants to renew the contract with Milliman USA. The Committee agreed that Milliman USA has been able to meet deadlines and is performing at acceptable levels. Jim will make sure that the actuary provides up -front cost estimates if the Committee asks the actuary to perform tasks outside the scope of the contract. Alan moved that the Committee renew the actuarial contract for another year; Susan seconded the motion. The motion passed unanimously (6-0). Adjournment: There being no further business, the Committee adjourned at 3:24 p.m. TOPICS FOR NEXT REGULAR MEETING The next regular meeting of the Committee will be on June 5, 2003, at 1:15 p.m. in the Council Information Center of City Hall. The tentative agenda includes: Filename: 2003 GMfN May 059193RevisedDrft General i iloyees' Retirement Committee May 1, 2003, Meeting Minutes Page 4 of 4 Plan Member Comments Approval of Minutes Plan Philosophy Status on Proposed Part -Time Plan Change Monthly Investment Update Other Business GENERAL EMPLOYEES' RETIREMENT PLAN WEB PAGE: The General Employees' web page can be found at www.fcgov.com/cityclerk/retirement.pho. 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: januar-y-9 April3 July 10 October 2 FebFuaFy § Play 1 August 7 November 6 Mafeh 6 June 5 September 4 December 4 Filename: 2003 GMfN May 059193RevisedDrft