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MINUTES
HULL CONTRIBUTORY RETIREMENT BOARD MEETING
April 28, 2004
The regular meeting of the Hull Contributory Retirement Board, duly posted to be held in the Selectmen's Meeting Room, Town Hall, Hull, MA on the above date was called to order at 9:01 a.m. Present were Leonard Colten, Chairperson, Members Chris McCabe, Ann MacNaughton and James Yacobucci, and Retirement Administrator Marcia Bohinc.
The Board read and attested to the minutes of the March 24, 2004 regular board meeting with one correction.
The Board read and attested to the minutes of the Executive Session from the March 24, 2004 board meeting with corrections.
On a motion by Jim Yacobucci, seconded by Chris McCabe, the board approved to release the March 24, 2004 Executive Session minutes directly.
The Board signed all bill warrants for April 2004.
The Board signed the contributory payroll for April 2004.
On a motion by C. McCabe, seconded by J. Yacobucci, the board approved a make-up contribution for Assistant Building Inspector William McLearn. The approval is for 13 months of creditable service for service as a call firefighter from 1976 through 1979 and 1983 through 1989, for a total cost of $742.33 if paid by June 30, 2004. The actual service total is 11 years, however Mr. McLearn had previously received creditable service for the two years of 1984 and 1985; thereby leaving nine years available for the 5 for 1 call fire calculation. The board was very clear regarding requirement of G.L. c. 32, § 4(1)(a) "that in no event shall he be credited with more than one year of creditable service for all such membership service rendered during any one calendar year".
Veteran's Service Credit
The board reviewed the requirements for purchasing creditable service for military service available to eligible veterans pursuant to G.L. c. 32, § 4(1)(h):
- The member must meet the definition of "veteran" according to G.L. c. 32, § 1
- The purchase may not exceed four (4) years
- The cost is based on the beginning compensation as of the last membership date
- Each year may be purchased for 10% of the defined compensation
On a motion by C. McCabe, seconded by J. Yacobucci, the board approved the request of firefighter James R. Lynch to purchase four years of creditable service, based on his last membership date of November 1, 1999 and beginning compensation $30,647.64, for a total cost of $12,259.04. The board granted a payment period of five years.
On a motion by J. Yacobucci, seconded by C. McCabe, the board approved the request of firefighter Frances J. Lyons to purchase two years of creditable service, based on his last membership date of June 1, 1979 and beginning compensation $11,193.78, for a total cost of $2,238.76. The board granted a payment period of two years.
The board discussed reasons veteran service requests would not be granted, permitted repayment periods, and a possible need for a board policy for the same. M. Bohinc will research and draft guidelines.
Public Hearing
At 9:20, Lenny Colten made a motion to open the Public Hearing regarding the granting of a fiscal year 2005 Cost of Living Adjustment (COLA) increase that will be effective on July 1, 2004. Seconded by J. Yacobucci and voted unanimously.
Overall, the discussion of granting a COLA by the board was dominated by the concern of financial health of the system.
Specifically, the cost of granting an increase was weighed against the level of retirement allowance for the retirees, and the increasing cost of living, including the increase in the Town sponsored health programs. Mr. Yacobucci referenced the January 1, 2003 actuarial valuation prepared by Stone Consulting, Inc. regarding the need to carefully monitor the funded position and the cash flow of the system. He drew the board's attention to the accumulated costs of continually granting the maximum 3% increases.
In attendance, Donald Brooker clarified on what the COLA is based - a 3% increase represents a maximum of $360 per year. He also questioned the demographics of the retirees, regarding how many of the retirees currently do not receive $12,000 per year; thereby mitigating the total cost of the increase.
To this point, the board reviewed an analysis of the annual financial impact of granting the Social Security Administration COLA of 2.1%, versus the increased COLA of up to 3%. Of the 134 retirees, 79 receive over $12,000 per year, 53 less than $12,000 and two are not eligible this year.
C. McCabe reasoned whether there is a need for a policy or criteria for the system to grant a COLA. He offered one possible method of making the annual decision based on performance of the retirement system, for example by taking into consideration the preceding 12 months return. Ann MacNaughton strongly disagreed, stating that performance does not matter - that the decision to grant a COLA must be made on how well funded the system is to assure future retirement benefits. McCabe proposed to return to his original position that no COLAs be issued for the foreseeable future, however that it will take a number of years for the system to rebound to an acceptable funding level. J. Yacobucci stated that he was not comfortable in not granting any COLA.
L. Colten reminded the board that the guidelines of the retirement system state that the primary responsibility of the system is to provide benefits to the participants and their beneficiaries. Because the participants and beneficiaries have no say and no vote at Town Meeting regarding the finances of the system and any pay raise, the board members must act responsibly.
L. Colten moved to close the Public Hearing at 9:45. Voted unanimously.
L. Colten made a motion to grant a 3% increase to all eligible retirees. This increase is applicable to only the first $12,000 of retirement allowance, up to a maximum of $360 per year, or $30 per month. Seconded by J. Yacobucci.
J Yacobucci amended the motion to make the 3% increase contingent on the performance of the retirement systems investments. Upon questions for clarification, the amendment was withdrawn.
The original motion was approved on a vote: L Colten, yes; C. McCabe, yes; J. Yacobucci, yes: Ann MacNaughton, no.
The Board reviewed the current year-to-date trial balance and cash accounts
Investments
The following investment materials were provided to the Board:
- Investors Fund Performance - Updated through March 2004
- PRIT - Summary of Plan Performance - March 31, 2004
- PRIM Board Update - March 2004
- SSgA - Total Return through March 2004
- The PERAC Financial Bulletin - April 2004
- Pension Reserves Investment Trust Fund - Performance Update as of March 31, 2004 (One quarter investment review from Michael Reardon of the Pension Reserves Investment Management Board (PRIM), fulfilling his promise of more frequent reviews and updates)
Hull Housing Authority
The board reviewed a letter dated April 20, 2004 from the Hull Housing Authority's Executive Director Paul Daley declining the retirement board's invitation for the HHA to appear before the retirement board. They declined due to the authority being in regular communication and negotiation with the retirement board's council.
However, after receiving the letter from Mr. Daley, L. Colten contacted the chairperson of the HHA to try to open a discussion between the boards. L. Colten reported this conversation was not productive, therefore he made a motion to instruct the retirement board's council, after exhausting all other avenues of negotiations, to start legal proceedings to collect the appropriations due to the retirement system for the prior two fiscal years. C. McCabe seconded the motion for discussion. J. Yacobucci stated that all avenues have been exhausted and legal proceedings should start immediately. C. McCabe, not being able to condone one board suing another, requested an opportunity to continue negotiations. He stated he would speak directly to one of the board members and try to get insight to their
understanding of the situation. He wants to help the authority recognize the severity of the situation, and perhaps help them secure funding. L. Colten withdrew his motion until the following meeting.
The board reviewed the agenda for the MACRS 2004 Annual Meeting on June 6 through June 9, 2004 in Hyannis, MA. J. Yacobucci made a motion, seconded by C. McCabe, that those that are interested be permitted to attend. J. Yacobucci and M. Bohinc will attend the full session; other members will try to attend specific days, based on the agenda. Voted unanimously.
Consultant Process
A sample Request for Proposal Questions from the Weymouth Retirement System, dated February 25, 2003 was provided to the Board without a current discussion regarding a possible consultant search. C. McCabe asked that this discussion be deferred until after Town Meeting so that he has time to prepare.
Election Update
A modified Election Notice has been playing on local TV Channel 10 in accordance with the board approved schedule. At this time, one current member and one retiree have returned completed nomination papers. All nomination papers are due by noon, Thursday, May 13, 2004.
New Business
In reviewing the State COLA Reimbursement Report, several discrepancies have been discovered. Upon review, the retirement allowances of several retirees will need to be adjusted, retro payments made to retirees, overpayments refunded to the board, and state reimbursements modified. A detailed report will be provided to the board for the next meeting.
Other
The board discussed the annual salary increase for Marcia Bohinc. The board was unwilling to change from the current hourly rate to a salaried rate that was acceptable to M. Bohinc. She did agree to the hourly rate proposed in the April meeting. Therefore, L. Colten made a motion that the board offer a three-year contract, to be effective on her anniversary date, with the first year increase of $6,000, based on 1,300 hours per year, or $4.62 per hour, and a $3,000 increase in each of the next two years, or $2.31 per hour each year, to be paid hourly. Seconded by J. Yacobucci. C. McCabe was concerned about funding the increase and whether an increase was budgeted. Because expenses are funded through investment return, this is not an issue. M. Bohinc also reported the discrepancies
found in the State COLA reimbursement result in one time revenue far surpassing the increase, and an annual revenue stream also exceeding the increase. L Colten asked that the contract be ready to sign for next meeting. Voted unanimously.
The Board read all informational mail:
- Pension Reserves Investment Management Board - Recap of April 2004 Board Meeting
- PERAC Pension Newsflash, March 24, 2004
- PERAC Pension News, April 2004
- PERAC Memo #17/2004 - Tobacco Company List
- PERAC Memo #18/2004 - Investment Manager List
- PERAC Corporate Governance & Public Investments Forum Newsletter - Middlesex Retirement System News - Spring 2004
- Newsletter - Retired State, County and Municipal Employees Association of Massachusetts - May 2004
- The Babson Staff Letter - March 26, 2004
- The Babson Staff Letter - April 9, 2004
- Segal Bulletin - March 2004 (2)
Other:
- Final Actuarial Valuation Report - January 1, 2003
The next regular Board Meeting is scheduled for Wednesday, May 26, at 9:00 a.m. in the Selectmen's Meeting Room.
The Hull Contributory Retirement Board meeting adjourned at 10:21 a.m.
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