HomeMy WebLinkAboutRetirement Committee - Minutes - 03/06/2003City of Fort Collins
Genera. dmployees Retirement Plan
GENERAL EMPLOYEES' RETIREMENT COMMITTEE
March 6, 2003, MEETING MINUTES
Approved, as amended, April 3, 2003
COUNCIL LIAISON: Mayor Ray Martinez
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 Julie Depperman & Ann Wardle (Finance)
PRESENT: Pat Kahle (Actuary, Milliman USA)
Debbie Weedman (Human Resources)
CALL TO ORDER: Susan Lehman called the meeting to order at 1:20 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.
Six people attended the pre -meeting open house to discuss the proposed Full-
Time/Part-Time Plan change. Most of those people understood the proposed change
but had questions about why Members' benefits were recalculated from the point the
Member's credited service began instead of from the June 30, 2003, forward date.
The Committee responded that this process was required in order to correct the
historical inequities inherent in the current Plan calculation. One Plan Member called
and said the change would be a positive impact to the Plan and the Committee should
proceed with the proposed change. There was also a long, written inquiry from one
Member which was addressed prior to the open house.
The Committee members and staff who have had contact with a Member will forward
the information to Ann Wardle, and she will compile a log that will include the date
and the comments. The Committee agreed to exclude Members names from the log.
Greg Tempel had sent an email to the Board regarding questions that had been asked
of him. One of the questions was regarding how time designated as family medical
leave would be handled with the proposed change. The Committee agreed that Greg
will respond directly to the two Plan Members using the response he drafted to the
Committee with a slight modification. The Committee will be sent a copy of each of
his two responses, which will be attached to the minutes. Alan Krcmarik motioned
2&9b*1W:NW4 9PWt 06Ffd'or • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
General EmploN' � 's Retirement Committee
March 6, 2003, Meeting Minutes
Page 2 of 4
that Greg be provided direction to make modifications as discussed and to respond
directly to the two Members and to append the answers to the minutes. Bill Switzer
seconded the motion, and the motion passed unanimously (6-0). There were no other
Plan Member comments.
APPROVAL OF MINUTES: Alan distributed minutes of the February 6, 2003,
meeting. The minutes will reflect that Susan Lehman was elected Chair and Bill
Switzer was elected Vice -Chair of the Committee. A few minor grammatical
corrections were made; Jim O'Neill moved approval of the minutes as corrected, and
Michele Hays -Johnson seconded the motion. The Committee approved the minutes as
unanimously (6-0).
DISCUSSION TOPICS
Alan noted that the monthly investment update was removed from the agenda, and a
brief update will be given at the next meeting.
1. Plan Philosophy: There were no comments on the Plan philosophy.
2. Status on Proposed Part -Time Plan Change: Julie Depperman distributed the
final memo that was sent on February 24 to 52 Plan Members whose benefit may
be frozen for a while due to the proposed Plan change. She attached a generic
sample printout that showed the information these Members received. On
February 25, staff distributed the memo describing the Plan change to the active
Plan Members. The memo also provided the details regarding the open houses.
Bill said he believes this change is the right thing to do, but he is concerned that
this is the first time the Committee has made a Plan change that will negatively
impact some of its Members. Alan reminded the Committee that, under the
current Plan, these Members would actually receive benefits that exceed the
amounts contributed to the Plan on their behalf and that this is why he is
comfortable in going forward with the proposed change. Susan said that if the
Committee does not proceed with the change, that the rest of the Plan Members
are, in fact, hurt from the inequities that presently exist. Alan said the Committee
has reviewed this issue for years with two actuarial firms, they have gone through
the spreadsheets and models, and that no one has come up with anything
different that could be done to correct the inequities in the current Plan.
This Plan change is scheduled to go to the City Council in May or June in the form
of a Resolution. The Committee will decide on the date of submission to Council
after the next open house.
The Board reviewed the letter from Milliman USA regarding the financial impact of
the proposed Plan changes. Pat Kahle expects gains for the Plan in the short
term; she said it may cost a little bit in the long term, but she believes it is not a
measurable amount.
Filename: GMIN0303
General EmploN' "s Retirement Committee
March 6, 2003, Meeting Minutes
Page 3 of 4
3. Other Business: Alan asked Pat to discuss the Plan's asset return assumptions
used in the Actuarial Report. She said that based on Milliman's asset-liablility
model, as of September 30, the market would have predicted a long-term rate of
return of 6.63%. She ran the model again as of December 31, and its projection
for the future improved to 6.71%. When the model was run in July 2002, it
predicted a return of 7.48%. She said she is comfortable with 7.5% on the rate of
return, because we are setting a long-term rate of return. She thinks her
assumptions of 7 to 7 1/2% range is reasonable and conservative. Jim pointed out
that we have used 7.5% since 1980 and maintained that level when the
assumption was considered very conservative; so, he thinks it is reasonable stay
with it. Pat will have a draft of the valuation report available at the next meeting.
Alan said the Committee got approval yesterday from the City Manager to put
$250,000 of additional funding into the Plan for 2002. The City Manager then
asked for specific ways to reduce future additional contributions and wants to see
meaningful proposals as to how the City can lower the pension obligation.
John Fischbach asked for the rationale for the City to contribute extra money to
the Plan and not to the defined contribution plans. John supported the addition of
the $250,000 but said he wants to see options for ways to reduce future
additional contributions to this Plan. Michele said she is not inclined to jump in
and suggest cuts when the Plan is a legal responsibility of the City. She reminded
the Committee that it was normal and customary for many years for the City to
contribute additional funds and does not feel the Committee should start
bargaining to keep the Plan in place with its existing benefits and contributions.
The possibility of putting options to a vote by Members was mentioned, but Alan
said the Plan has always assigned those decisions to the Committee. Committee
members will think about the funding alternatives and come prepared to discuss
them at the April meeting.
Alan asked if Milliman has information on what others are doing in facing similar
situations; Pat said she can help put some of this information together as she
prepares the Valuation Report and will bring this information to the next meeting.
Jim moved the authorization to spend up to two hours of Milliman's time
researching this issue, and Alan seconded the motion. The motion was approved
unanimously (6-0). A second General Employees' Retirement Committee meeting
may be necessary in April to accomplish all of the Committee's tasks.
Adjournment: There being no further business, the Committee adjourned at 3:21
p. M.
TOPICS FOR NEXT REGULAR MEETING
The next regular meeting of the Committee will be on April 3, 2003, at 1:15 p.m. in
the Council Information Center of City Hall. An Open House will precede this meeting
and will begin at 11:30 a.m. The tentative agenda includes:
Plan Member Comments
Filename: GMIN0303
General Emplo,' ''s Retirement Committee
Marcn 6, 2003, Meeting Minutes
Page 4 of 4
Approval of Minutes
Plan Philosophy
Status on Proposed Part -Time Plan Change
Review of Actuarial Report
Discussion of Funding Options
Brief Quarterly Investment Update
Other Business
GENERAL EMPLOYEES' RETIREMENT PLAN WEB PAGE: The General Employees'
web page can be found at www.fcgov.com/cityclerk/retirement_phl). The Committee's
2002 Annual Report, 2003 Work Plan, and monthly minutes are available at this site.
2002 Meeting Schedule:
The regular meeting time for the Committee is at 1:15 p.m. on the first Thursday of
each month. There will be an Open House preceding the April 3, 2003, meeting
beginning at 11:30 a.m. The regular location is the Council Information Center at City
Hall. For 2002, the Committee has scheduled the meetings as shown below:
April 3 July 10 October 2
May 1 August 7 November 6
June 5 September 4 December 4
Filename: GMIN0303