HomeMy WebLinkAboutRetirement Committee - Minutes - 12/04/1997Retirement Plan
City of Fort Collins
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COM ffME
DECEMBER 4,1997 MEETING MINUTES
COUNCIL LIAISON: Mayor Ann Azari
COMIWME MEMBERS PRESENT:
Jim Hume, 221-6776
Dave Agee, 221-6770
Alan Krcmarik, 221-6788
Kevin Westhuis, 224-6156
Patti Teraoka, 221-6715
OTHERS PRESENT:
Russ Proctor and Mark Sanford, Watson Wyatt Worldwide, the City's actuarial firm
Jaime Mares (Human Resources Director)
Deb Weedman, (Staff Support - Human Resources)
Greg Tempel (Staff Support - Legal)
Bob Eichem (Staff Support - Investments)
Sue Wilcox (Staff Support - Secretary)
CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at 1: 30 p.m. in
the Council Information Center of City Hall West.
ITEMS OF NOTE: On behalf of the Committee and staff members, Kevin thanked Russ Proctor
and Mark Sanford for the Christmas luncheon.
APPROVAL OF MINUTES: There were some convections to the November 6, 1997 minutes.
Alan Krcmarik moved the minutes be approved as amended and Patti Teraoka seconded the
motion. The motion passed unanimously.
DISCUSSION TOPICS:
I. GER PLAN MEMBER(S) COMMENTS/CITIZEN PARTICIPATION: There were no
member or citizen comments.
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Juu Lai orte Avenue • M.). Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
GERC Minutes - April 3, 1997
2. DISCUSSION OF COST OF LIVING ADJUSTMENT (COLA) FOR CURRENT
RETIREES
MAIN POINTS: During the 1998-99 budget process, the GERC recommended the City provide
a cost of living adjustment (COLA) for current retirees and offered several ways to cover this
cost. The City Manager's response was for the GER Plan to fund any COLA from its existing
contributions. The GERC members felt that perhaps City management staff did not understand
that under the Total Compensation plan, any COLA for current retirees would not come from the
GERP fund, but would have to be paid for by current employees. The Committee members were
looking for a way to clarify this with management staff members and had invited Diane Jones
(Deputy City Manager), Doug Smith (Budget Director), and Jaime Mares (Human Resources
Director) to visit with the Committee about the issue.
Twice in the past the GER Plan has funded one-time COLAs because the total cost of the plan
was less than the annual actuarial contribution. Both of the one-time adjustments were done prior
to the adoption of the Total Compensation policy. The cost of the 1997 proposed COLA was
estimated at $40,000 originally, but that is an annual cost and the actual one-time catch-up cost
would be $800,000 or .3% of pay for all GERC members. City Council implemented the Total
Compensation policy in 1990, at roughly the same time the last COLA was approved. Since then,
inflation, as measured by the Consumer Price Index, has risen about 21%.
Jaime Mares was present and explained to the group that the Total Compensation program is a
way for the employer to control personnel costs. Currently the GERP contribution is 4.34521/c of
base salary. It would be about 4.65% if a COLA were included, which would amount to a .3%
reduction in employees' take-home pay or other benefits. Jaime felt the current employees would
not favor providing a benefit for retirees at current employee expense. He also felt that the City
organization had made a commitment in 1972 to a defined benefit retirement plan and that it was
living up to that commitment. Also when that plan was first implemented, no other alternative
plans [like the 457 and 401(a) plans] for retirement contributions existed.
Committee members discussed whether the Consumer Price Index accurately reflects the cost of
living for retirees. Using a 10% cost of living increase would require $400,000 for a COLA. The
Committee discussed the process and questioned whether going through the regular budget
process should be replaced by having the request reviewed by the Finance Committee, since the
GERC is appointed by City Council.
CONCLUSIONS/NEXT STEPS: Jaime volunteered to write a memo showing both sides of the
discussion and will include an explanation of the funds that would be needed and possible sources.
Kevin and Jaime will present the memo to the City Manager.
3. ANNUAL REPORT
MAIN POINTS: Kevin will prepare a draft of the Annual Report for 1997 for the next meeting.
CONCLUSION/NEXT STEPS: Members can comment on the Annual Report at the January
meeting and Kevin will make the final changes and send to the City Clerk's Office by January 31.
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J GERC Minutes - December 4, 1s
4. DISCUSSION OF INDIVIDUAL BENEFIT CALCULATIONS & EDUCATION
PRESENTATIONS
MAIN POINTS: Russ sent a letter to Kevin stating the costs for preparing calculations of
individual members benefits and making educational presentations to the members. Because of
schedule conflicts, a planned discussion among the City, the actuary, and ICMA Retirement
Corporation about mutual cooperation to prepare the calculations did not take place as planned.
Alan will meet with Russ and Mark after this meeting to discuss how to calculate PVAB (Present
Value of Accrued Benefits). There was discussion also about different ways to estimate how
many members might choose either the DC or DB plans.
CONCLUSION/NEXT STEPS: Alan will consult with Watson Wyatt and ICMA Retirement
Corporation to discuss preparation of the calculation information and provide educational
opportunities to the members.
S. INVESTMENT REPORT, 3RD QUARTER
MAIN POINTS: Alan noted that the draft 3rd Quarter 1997 Investment Report was presented at
the October meeting, and no changes were made before finalizing it. He distributed the final
version. Bob provided some information on the devaluation of Japanese currency and how this
affected the world markets. The New Asia Fund is down over 40%. It was pointed out that all
stocks go through up and down periods and while this does not make them a bad investment, it
may mean that the Committee would choose to cap further investments in that fund, while
retaining the shares it already owns. Selling now would result in a loss to the fund, so the
recommendation is to keep existing shares of New Asia until it turns up again.
One of the values of diversification is that seldom do all of the funds drop at the same time. Also,
because the GER Plan has funds not needed to pay benefits for some years, it can afford to
include some more -aggressive funds, and these funds are usually more volatile. Bob suggested
the GERC consider investing in some other international funds which are showing positive
returns. Jim Hume illustrated graphically how greater diversification actually reduces risk and
offers extra security.
CONCLUSIONS/NEXT STEPS: The 3rd Quarter, 1997 Investment Report was accepted and
no other action was required.
7. OTHER BUSINESS
MAIN POINTS: Kevin routed a flyer for a Networking DC/DB Conference put on by the
Employee Benefit Research Institute. This was one that Alan attended last year and found
beneficial, although he had expected it to be more heavily weighted with DC proponents and
information.
CONCLUSION/NEXT STEPS: Jun Hume expressed interest in attending and will check his
calendar. Kevin Westhuis moved that expenses be paid for Jim Hume to attend this conference, if
his calendar is free. Dave Agee seconded the motion, which passed unanimously.
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GERC Minutes - December 4, 1997
AGENDA & SCHEDULE FOR NEXT MEETING
SPECIAL NOTE: Due to the New Year's holiday, the next meeting will be on the Second
Thursday, January 8th,1998 at 1:15 pm in the Council Information Center (CIC) of City Hall
West. The agenda will include:
1. Plan Member Comments/Citizen Participation
2. Consider Approving December 4th Meeting ]Minutes
3. Review of Jaime Mares's COLA summary
4. Review of Annual Report for 1997
Discussion of Personal Retirement Planning Statements, Benefit Calculations, &
Education for Members
6. Regular Investment Review
7. Other Business
ADJOURNMENT
The meeting was adjourned at 3:15 p.m.
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1st Thursday
of each month in the Council Information Center, City Hall West.
The schedule for 1998 is as follows:
THURSDAY, JANUARY 8, 1998
THURSDAY, FEBRUARY 5,.1998
THURSDAY, MARCH 5, 1998
THURSDAY, APRIL 2, 1998
THURSDAY, MAY 7, 1998
THURSDAY, JUNE 4, 1998
THURSDAY, JULY 9, 1998**
THURSDAY, AUGUST 5, 1998
THURSDAY, SEPTEMBER 3, 1998
THURSDAY, OCTOBER 12, 1998
THURSDAY, NOVEMBER 5, 1998
THURSDAY, DECEMBER 3, 1998
First Thursday falls on New Year's holiday.
**Because the July meeting falls so close to the
observance of Independence Day (on July
3rd), it was moved to the next Thursday,
July 9 th. 1998
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