MINUTES
HULL CONTRIBUTORY RETIREMENT BOARD MEETING
November 19, 2003
The regular meeting of the Hull Contributory Retirement Board, duly posted to be held in the Selectmen's Meeting Room Meeting Room, Town Hall, Hull, MA on the above date was called to order at 9:00 a.m. Present were Maurice Murphy, Chairman, Members Leonard Colten, Ann MacNaughton and James Yacobucci, and Retirement Administrator Marcia Bohinc.
The Board welcomed Hull Times reported Stephen Martin to the meeting and remarked that he was welcome to attend and ask questions any time.
The Board read and attested to the minutes of the regular October 29, 2003 and the special November 4, 2003 board meetings without correction.
Update: From the November 4th meeting, a Board member expressed concern about setting a precedent by allowing sick leave buy back to be used in a pension calculation. That prompted testimony that at retirement, police officer Robert Jeffery had received a one for one sick leave buy back that was pensionable, therefore the precedent had already been set. At the direction of the Chairman of the Retirement Board, that statement was researched and determined to be false. Upon verification of compensation and recalculation of the retirement allowance, it was confirmed there was no sick leave buy back included.
The Board signed all bill warrants for November 2003.
The Board unanimously approved the following new member applications:
Firefighter Brian Thompson
Firefighter Michael Gallagher
Collector/Treasurer Arthur Flavin
Highway Department Worker Kristopher Nixon
The Board reviewed the minutes of the following executive sessions:
August 27, 2003
December 19, 2002
August 22, 2002
July 25, 2002
June 25, 2002
March 28, 2002
January 17, 2002
May 23, 2001
April 25, 2001
Maurice Murphy made a motion to release all of the above minutes in their entirety. Seconded by Jim Yacobucci. Voted Lenny Colten, M Murphy, J. Yacobucci: yes, Ann MacNaughton abstained due to not being a board member for all of the meetings involved in the vote.
The Board reviewed and discussed the year-to-date trial balance and cash accounts' reconciliation, specifically how the assets have increased year-to-date.
Update on the last remaining receivable: The Hull Housing Authority has not made their fiscal year 2003 (due December 31, 2002) or their fiscal year 2004 (due December 31, 2003) appropriation. Repeated requests for the FY03 amount due have gone unanswered. The board will request their counsel to write a letter to the HHA.
G.L. c. 32 §91A Update:
The Public Employee Retirement Administration Commission (PERAC) identified three retirees as having failed to submit the required annual report of earnings.
1. The first retiree has been on the list since April 2003, with checks being held since May 2003. Notices have been sent.
2. The second retiree filed for an extension that was valid through October 2003 and PERAC directed any held checks be released. This retiree is now out of compliance and will have checks held again, beginning in November. New notice of suspension sent.
3. The third retiree has had checks suspended due to incarceration - the reporting failure is secondary to this suspension.
Investments
The following investment materials were provided to the Board:
SSgA and PRIT performance updates
Funding History (requested by Chris McCabe in October meeting)
840 CMR 18.00 - Formation of Investment Policy and Statement of Investment Objectives
- Discussion followed regarding the formation of an Investment Policy as required by PERAC
Statement of Investment Objectives (PERAC Form)
SSgA - Third Quarter Performance Statement
Old Business Update:
Beginning in 2003, Sandie Grauds became a Substitute Teacher for the Hull schools; however no retirement deductions were being made from school compensation. This was an error that has been corrected. The calculation of her overpayment to the Retirement System (deductions at 9% instead of 8%) has been finalized and the final make up contribution calculated.
The protocol for Board members regarding contacting legal counsel was discussed as a follow-up from the prior meeting. Research revealed minutes from the regular Board meeting of September 28, 1999, in which the board voted that the administrative assistant must receive permission from the chair and the vice chair prior to contacting the board's attorney. There was no requirement for a Board member to contact anyone prior to seeking legal counsel. After much discussion regarding the need for such a control, why the policy was originally voted, a review of year to date legal costs and the current legal needs, it was determined that the restriction is not currently required. However, a motion by M. Murphy to repeal the restriction was not seconded, therefore the constraint will remain.
The Board received a presentation from William J. Cray, CLU of Cray-Dowd Insurance reviewing fidelity and fiduciary liability insurance.
The two types of insurance were discussed:
1. Fiduciary Liability Insurance:
Defined as a policy that will help protect the Board from claims made due to:
a. breach of fiduciary duties, and
b. negligence in the administration of the plan (relative to investments).
Failure to comply with the fiduciary duty could subject the individual board members to personal liability.
Not required by PERAC.
2. Fidelity Insurance
Defined as a policy that will protect the Board for claims of employee dishonesty.
Is required by 840CMR 17.01.
Cray-Dowd will cover the Hull Contributory Retirement Board with Fidelity coverage with a $1 million per person policy. This will meet PERAC's requirements.
One factor in obtaining the Fiduciary coverage is the funding level of the system. Currently the underwriters require a minimum funding in the 60% range, clearly above HullPerforming an actuarial valuation each year to closely monitor cash flow and funding
Requesting early payment of the appropriation from the Town
Beginning the search for an investment advisor
Conducting formal reviews of investment strategies relative to needs
It was also noted that the Board has never had a claim since being accepted into the insurance pool in 1983
Mr. Cray responded to a question regarding the need of fiduciary insurance if the Board invests 100% of the system assets in PRIT. He stated that he is of the opinion that 100% participation in PRIT does not relieve the Board of their fiduciary responsibilities therefore their need for fiduciary insurance.
In summary, Mr. Cray confirmed that he understood the Board's desire for fiduciary insurance and will work with them to obtain the coverage. The policy is effective on February 1, 2004; therefore he will be in contact with them in the near future.
The Board responded to questions from Stephen Martin regarding the minutes of the June 25, 2002, September 24, 2003 and November 4, 2003 Board meetings and the history of Police Chief Donald Brooker's contract of March 2002 with the Board of Selectmen.
The Board read all informational mail:
PERAC Memo #38/2003 - Due Diligence and Oversight
Memo from Ralph White - Re: Local ERI Update
Segal Bulletin - October 2003
Segal Bulletin - November 2003
Fidelity Update - New Freedom Funds
Polaris - Third Quarter 2003 Report
Polaris Global Value Fund
Quant Funds
The next regular Board Meeting is scheduled for Wednesday, December 17, 2003, at 9:00 a.m. in the Selectmen's Meeting Room.
The Hull Contributory Retirement Board meeting adjourned at 10:42 a.m.
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