PUBLIC EMPLOYEES' RETIREMENT BOARD 100 N Park Ave, Rm 201 Helena MT Thursday, June 13, 2013 MINUTES

Transcription

1 PUBLIC EMPLOYEES' RETIREMENT BOARD 100 N Park Ave, Rm 201 Helena MT Thursday, June 13, 2013 MINUTES President Scott Moore called the regular Public Employees' Retirement Meeting to order at 8:35 a.m., Thursday, June 13, Roll call was taken. Board members, staff and public present were: Scott Moore, President Terrence Smith, Vice President Bob Bugni, Member Timm Twardoski, Member Sheena Wilson, Member Mike McGinley, Member Melissa Strecker, Member Staff: Roxanne Minnehan, Executive Director Melanie Symons, Chief Legal Counsel Barbara Quinn, Fiscal Services Bureau Chief Patricia Davis, Member Services BC Hollie Koehler, Internal Auditor Kate Talley, Legal Counsel Jenny Weigand, Education Supervisor Kris Vladic, Program Specialist Diann Levandowski, MPERA Ali Sturm, MPERA Public: Kris Wilkinson, Legislative Fiscal Division Mark Murphy, MPPA & MCAA Joe Triem, Legislative Fiscal Division Rick Hansen, MSFA Ed Cleary, MSFA Beth Long, GWRS Diane Fladmo, MEA-MFT Russell Wrigg, AMPRE Dax Fraser, MSFA Doug Neil, MSFA Sheryl Wood, MACo Jason Baker, MSFA Kurt Bushnell, MSFA Tom Schneider, MPEA Karen Zackheim, FWP Sherri Scurr, Legislative Services Division Roll Call Roll call was taken. All members present. Public/Member Comment

2 Page 2 of 9 Executive Director s Report Consent Agenda 1. Board Meeting Minutes May 09, 2013, May 28, Deferred Compensation (457) Plan Adoption Agreement City of Helena 3. Defined Contribution Plans Stable Value Transamerica Contract Extension 4. FY 2014 Administrative Contracts a. Agency Legal Services Augment Staff, Hearing Officers b. ICE Miller Tax Consultants Motion: Member Sheena Wilson moved to approve the consent agenda as presented, with minor correction to May 28, 2013 minutes. Second: Member Timm Twardoski Notice of Adoption of Temporary Emergency Rules Working Retirees Melanie Symons provided an overview of the working retiree rule amendments. The rules require amendment due to 2013 legislation requiring employer contributions for retirees returning to work in PERS, SRS and FURS. Member Mike McGinley expressed concern regarding the independent contractor language. He questions the definition of independent contractor. Anyone hired in a retirement system covered position cannot claim to be an independent contractor. Patricia Davis provided an example of how the independent contractor status would require reporting to PERS as a working retiree. She also provided examples of how they would not be covered. The rule will be changed from an emergency rule to a temporary rule. Motion: Member Sheena Wilson moved to approve MAR Notice No with the change to temporary rules. Second: Member Melissa Strecker Vote: 6/1, Mike McGinley opposed Deferred Compensation (457) Plan Document Patricia Davis explained the modification to the 457 Plan Document to allow Roth contributions. The plan document has been submitted to the IRS by our tax counsel for a private letter ruling. We will begin accepting contributions effective July 1, Motion: Vice-President Terrence Smith moved to accept the 457 Plan Document as presented with changes to allow for Roth contributions. Second: Member Sheena Wilson No public comment

3 Page 3 of 9 FY 2013 Reserve MPERAtiv Program Barbara Quinn first provided basic education on the budget and the timing, preparation and statutory requirements for the Board s budget. It is anticipated the FY 2013 PERB budget will come in under the allowable statutory cap of 1.5% of benefits paid. Any amount remaining under the cap reverts to the pension trust funds. Past decisions have set aside the excess budget amount from the current fiscal year to fund a portion of the MPERAtiv program expenses in the next fiscal year. Last year staff recommended allowing a cushion of $50,000 to remain in the prior year budget for any unexpected fiscal year end expense because the general ledger does not officially close until the 3rd week of July. The same is recommended this year. We are anticipating approximately one million dollars for carry over to FY 2014 budget. The reserve that is carried over is for use on the project. Any monies that are not spent on the project in FY 2014 will stay in the trust. Motion: Member Timm Twardoski moved to accept the staff recommendation to maintain a balance of $50,000 rounded to the nearest dollar in the FY 2013 budget and earmark the remainder for funding the MPERAtiv program in FY Second: Member Sheena Wilson Proposed FY 2014 Budget Ms. Quinn highlighted additional expenses for this year. The budget includes a three new staff positions: a deputy director, compliance attorney and IT supervisor. The deputy director would be more hands on in the daily operations in order to free up the Executive Director for the legislation issues and to allow for succession planning. The Compliance Attorney would be the contact person for the staff to understand the statutes and rules and application to daily operations. The IT position would require restructuring the unit and eliminating a half-time FTE. The current IT supervisor is a lead for managing both hardware and software. The goal is to separate those duties. Sheena Wilson inquired what the level of FTE has been over the last 10 years. Vice-President Smith requested a history of previous positions as well as the descriptions of the new positions being requested. The travel category of the budget includes instate travel for the education unit as well as staff attending conferences. Costs are expected to increase due to the increase in scheduled employer audits. The out-of-state travel is for staff to attend out-of-state conference regarding retirement issues. There have been items added to the budget to accommodate a possible expansion of the office space. Some of the items included are additional rent and workstations.

4 Page 4 of 9 Motion: Vice-President Terry Smith moved to postpone the approval of budget until the July meeting. Second: Member Melissa Strecker Education Board Member Orientation III Defined Benefit Plan Distinctions Discussion: Melanie Symons presented distinctions between the Defined Benefit Plans. The green sheets provide comparisons across all plans in a table format. The green sheets are distributed to the legislators each session. A major difference is the optional retirement benefits. PERS, GWPORS, SRS, and JRS allow the member to choose options for continuing benefits after the member s death. HPORS, MPORS, and FURS have statutory beneficiaries. Upon the member s passing the member s spouse or dependent children continue to receive the benefit. Patricia Davis provided information on the disability provisions for each plan. The definition for disability is the same for all systems. It is defined as the total inability of the member to perform the essential elements of the member's job duties even with reasonable accommodation required by the ADA. PERS disability retirees have earnings limitations. There are differences between the systems. Some systems distinguish between duty related and non-duty related disabilities. All disabilities are converted to regular retirement at normal retirement age. Investments Verbal Update Sheena Wilson provided the R.V. Kuhns reports for review showing the Board of Investments performance. David Ewer expressed his gratitude regarding the cooperation MPERA staff to implement legislation. We should be ending the fiscal year in a good a position. We are currently just below 12% return. Ms. Wilson will report the fiscal year end information at the next meeting. Committee Meeting Updates Audit Committee Bob Bugni reported the results of the May 9, 2013 committee meeting. There will be more field audits due to significant findings from previous employer audits. Legislative Committee Nothing to report. Personnel Committee Mr. Twardoski reported contract negotiations will be starting soon. Policy Committee Nothing to report. VFCA Audit Process Hollie Koehler is going to begin audits of approximately 20 volunteer fire departments. She will be verifying documentation exists to support the FY 2012 annual certificates. There is a possibility members will lose service credit if the departments cannot provide the training documentation.

5 Page 5 of 9 Executive Director Verbal Update Roxanne Minnehan reported Barbara Quinn attended the Legislative Audit Committee meeting just this morning. Ms. Quinn reported the Committee accepted LAD s audit report for MPERA. The State Administration and Veterans' Affairs (SAVA) committee will be meeting on July 11, This is the same day as the PERB meeting. Ms. Minnehan has corresponded with Sheri Scurr requesting MPERA agenda items be scheduled over the lunch hour. A break will be scheduled during the July Board meeting to allow staff and Board members to attend the SAVA meeting. Staffing update: The DC Accounting Technician has been vacated. The DB Accounting Technician has been filled by Joyce Love. Interviews for the Executive Assistant position are being conducted this week. The intention is to have the new person on board by the July meeting. There are six interviewees. Julie Benson-Rosston, facilitator, has completed staff interviews and is ready to report to the LMC and staff. Her report will include suggestions and recommendations for improvement. Union negotiations are pending. The Governor s directive is a 3% increase on July 1, 2013 and 5% increase on November 15, The proposed budget includes these increases. LFC Meeting Verbal Update Melanie Symons provided an update on the Legislative Finance Committee (LFC) meeting on June 11, We were invited to discuss our rules to implement HB 454. The biggest portion of the discussion centered on the GABA rate to be used in the FY 2013 Actuary Valuation. Using the 1.5% GABA improves the funding situation bringing us under a 25 year amortization period, which results in eliminating the additional employer and employee contributions on January 1, In all of the fiscal notes for HB 454, the 1.5% GABA rate was used. Using the 1.5% GABA rate, the actuary is predicting that the additional employer and employee contributions will be eliminated in six months. Therefore, the new contributions rates effective July 1, 2013 would end January 1, HB 454 defines that once we reach a 25 year or less amortization period, the additional contributions will end January 1 immediately following the actuarial valuation. The LFC expressed legislative intent was not to have the contributions eliminated so quickly our emergency rules do not meet their intent. There are two triggers in the bill. One is the amortization period for the contributions. The other is for GABA adjustment. The GABA is zero if the amortization period is more than 40 years. Once the amortization period is above 40 years then the GABA rate is reduced 0.1% for every

6 Page 6 of 9 2% that the funding percentage is under 90%. The LFC expressed they thought the two triggers went hand-in-hand. Ms. Symons tried to explain the difference in the measurements. SAVA is our interim rule review committee. LFC wants the Board to consider withdrawing MAR based on two criteria. The first criterion is the rules do not meet the emergency rule requirements. The second criterion is they believe legislative intent was the actuarial valuation would be performed based on the law in effect on June 30, Ms. Symons interprets LFC s intent is that the actuarial valuation use the 3% GABA in effective on June 30, But, that also means that the valuation would not be using the additional contributions or the coal tax money provided for in HB 454. She believes that there is misunderstanding as to the difference between what the actuary needs to consider to project liabilities from, for example, financial statements which reflect the financial status at fiscal year end. Ms. Symons advised the Board to have a full discussion, but to recognize that they cannot take action on the LFC letter as it was not on the agenda. Mike McGinley asked for explanation of the mechanics of HB 454. HB 454 has moving target GABA to be anywhere from 0 to 1.5%. The actuary requires a firm GABA percentage to do his actuarial evaluation. The bill has two different triggers. The contributions are based on the amortization period and the GABA is based on the funding level. Even though they move the same way they are not corresponding. The Board Legislative Committee will meet Wednesday May 19, 2013 at 2:00 p.m. to take action on the LFC letter. Litigation Verbal Update Kate Talley reported in the David Briese case. An order denying attorney fees was issued May 17, The notice and final appeal is due June 21, The Jeff Fauque case is before district court. On May 16, 2013, Mr. Fauque requested oral argument and received an extension until June 14, 2013 to file reply. Melanie Symons reported Ober Spear submitted a request for trial by jury. Mediation was conducted in the Center for Mental Health case in Great Falls on June 4th, The mediation was unsuccessful. Depositions will be held the week of July 15, In the Wrzesien case, Stuart Segrest from the Attorney General's office is deposing the two plaintiffs in the case on July 2, Ms. Symons will be attending as well. We are also preparing a motion for summary judgment. Ms. Symons is currently reviewing the document.

7 Page 7 of 9 ACLU Correspondence On May 6, 2013 the ACLU sent a letter to the Members of the Missoula Fire Department regarding the limitation of retirement benefits for same sex couples. The ACLU is looking for statutes that discriminate against same sex couples and the effect on the retirement benefits. Firefighter's Unified Retirement System has statutory beneficiaries, either spouse or dependent children, which receive the same benefit as the member received. Informational Items FAQ on GASB statements 67 & 68 will be posted to the website to provide additional information for the employers. Barbara Quinn presented the frequently asked questions on GASB statements 67 and 68. She is requesting that these documents be posted on the MPERA website. They will be posted for the use of the employers. The proposed standard under GASB Statement No. 27 will significantly change the financial reporting requirements of the employers participating in the MPERA plans. MPERA is working with our actuary to develop the schedules necessary to help employers comply with the new standards. MPERAtiv Written Update The report was presented to the Board and there were no questions regarding the report on MPERAtiv. Conference Written Reports- 1. Due Diligence Visit Great-West Retirement Services 2. PRISM President Scott Moore thanked the staff for their reports regarding the conferences they attended. Operational Board Summaries March and April Vice-President Terry Smith inquired about the difference in the DC Disability Distributions. Fiscal Year 2012 was 26,070 and FY 2013 was 3,010. Ms. Quinn will investigate the difference and report back. EIAC Meeting July 18 Board Meetings July 11, August 8, September 12

8 Page 8 of 9 CLOSED MEETING SUMMARY The following portion of the meeting relates to matters of individual privacy. The Board President determined that the demands of individual privacy clearly exceed the merits of public disclosure. As such, this portion of the meeting was closed at 2:05 p.m. I. Consent Agenda A. Closed Meeting Minutes May 09, 2013 B. Disability Report C. Finalized Service Retirements/Death Benefits Motion: Member Mike McGinley made a motion to approve the consent agenda as presented. Second: Member Bob Bugni II. Disability Report - Disability Denial, SY, PERS Motion: Member Mike McGinley made a motion to accept the staff recommendation to deny disability retirement to SY. Second: Member Timm Twardoski III. Contested Cases A. Informal Consideration 1. Arbitration Agreement TG, PERS Motion: Member Sheena Wilson made a motion to approve award of service credit and membership service for award period. Second: Member Mike McGinley 2. Option 4 Benefit, GD, PERS MD Account Motion: Vice-President Terry Smith made a motion that we waive the collection of the overpayment from GD. Second Member Bob Bugni B. Informal Re-consideration 1. Disability Retirement, AD, PERS This case is rescheduled for the July 11, 2013 meeting. 2. Mandatory Retroactive Request for Payment of Delinquent Contributions, GM, PERS Motion: Member Sheena Wilson made a motion that we recalculate the interest only to June 11, 2001.

9 Page 9 of 9 Second: Member Timm Twardoski C. Legal Cases Update Melanie Symons gave an update on two of her cases and Kate Talley gave an update on two of her cases. ADJOURNMENT President Scott Moore adjourned the meeting at approximately 3:40 p.m. The next regular meeting will be Thursday, July 11, The Board entered into Executive Session at 3:45 p.m. Scott Moore, President ATTEST: Roxanne M Minnehan, Executive Director