MINUTES
HULL CONTRIBUTORY RETIREMENT BOARD MEETING
January 19, 2005
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 Donald Brooker, Arthur Flavin, Ann MacNaughton and James Yacobucci and Retirement Administrator Marcia Bohinc.
The chair recognized new member Treasurer/Collector Arthur Flavin, appointed by the Board of Selectmen in their December 28, 2004 meeting to serve as their designee in place of Town Manager Chris McCabe. Mr. McCabe’s term is through December 7, 2005.
The Board read and attested to the minutes of the December 21, 2004 regular Board meeting. Ann MacNaughton requested to modify her roundtable statement regarding the hiring of an investment consultant. With this change, the Board unanimously approved the minutes.
Relative to the December minutes, the Board had a lengthy discussion on a request by Lenny Colten. He asked that a footnote be included to the December minutes to clarify the general definition of ‘sick leave buy-back’ versus the definition of the term ‘sick leave buy-back’ that was used in an employment contract that was a finding in the recent PERAC audit. For the record, L. Colten wanted it stated that in general, according to Personnel Bylaws for the Town of Hull, Section 46.4.3 j., “employees not included in a collective bargaining agreement, upon retirement or resignation after five years of full time service shall be paid for the accumulated and unused sick days earned at a ratio of (1) days pay for every (3) unused sick days…” This benefit is not
considered regular compensation for the retirement system, therefore is not included in the retirement allowance calculation.
The ‘sick leave buy-back’ specific to the audit finding was a modification to the salary structure, where the benefit defined in Section 46.4.3 i. was terminated and replaced with an increase in regular compensation. This section states “employees who have accumulated 90 days sick leave shall be given one additional day compensatory time off, or equivalent pay, for each three unused sick leave days.” J. Yacobucci expressed his opinion that this topic has been discussed and discussed further. The audit response has been submitted and the issue needs to be put to rest, unless brought up again by PERAC.
However, Mr. Colten’s request was accepted and will be entered into the minutes on a vote of L. Colten, yes, Arthur Flavin, yes, and Ann MacNaughton, yes, Jim Yacobucci abstained. Donald Brooker recused himself from both the Board discussion and vote.
Board Organization
D. Brooker made a motion to nominate Leonard Colten as chairperson of the Hull Contributory Retirement Board. Seconded by A. MacNaughton. The secretary was instructed to cast one vote for Leonard Colten as chair. Mr. Colten thanked the Board for their support and confidence.
D. Brooker made a motion to nominate Ann MacNaughton as vice chairperson of the Hull Contributory Retirement Board. Seconded by A. Flavin. The secretary was instructed to cast one vote for Ann MacNaughton as vice chair.
The Board signed all bill warrants for January 2005.
The Board signed an addendum to the December 2004 payroll.
Transfer of Funds
The Board reviewed the asset transfer from SSgA and Freedom Capital to the Pension Reserves Investment Trust (PRIT) Fund as of January 3, 2005. With the exception of the money market income payable to the trust on January 3, 100% of the SSgA assets totaling $3,053,859.30 were transferred on January 3, 2005 for direct investment to the PRIT core fund. The money market income was transferred by check in the amount of $37.14 on January 11, 2005 and invested in the cash fund.
Freedom Capital transferred the equity portion to PRIT in full on January 5, 2005. Because investment in PRIT is as of the first business day, this amount will be in the cash fund until February 1, 2005. The fixed income portion from Freedom Capital was delayed until January 10, 2005 due to a State Street system problem, and invested in the cash fund. The total transferred from Freedom Capital was $4,174,384.05.
With the exception of $175,000 for the February liabilities, the full cash fund will be invested in the core fund as of February 1, 2005. A maintenance balance of $175,000 will be kept for on-going liabilities.
At the request of the Board, all information relative to former Police Officer David Leary’s request for additional compensation from the Town, and possibly subsequent increase in his retirement allowance was forwarded to Board Attorney Michael Sacco for review and opinion. Mr. Sacco’s responded with the opinion that the payment of an educational incentive is regular compensation, and as such, should be included in Officer Leary’s retirement allowance. He went on to state that “since the Town of Hull has made the determination that Officer Leary was entitled to receive his educational incentive pay as part of his injured on duty compensation, and educational incentive pay is included in the definition of regular compensation, it is my opinion that Officer Leary’s retirement
allowance should be recalculated to include said pay.”
The pursuing discussion revealed the genesis of and the reasoning for the particular section of the police contract dealing with benefits while on injured on duty status. D. Brooker stated that based on the contract language and the method of payment by the Town, the Retirement Board should not increase the retirement allowance. Giving additional background of the educational incentive, and Attorney Sacco’s statement that “it is not determinative whether a provision in a collective bargaining agreement considers a particular payment regular compensation; rather it is the retirement board which makes such a determination”, he recommended that if the Board has the authority not to pay the increase, they should not.
Based on the attorney’s opinion, it appears that the Board’s decision is dependent upon what the money the Town paid to Officer Leary was – educational incentive that is by definition ‘regular compensation’ and pensionable, or some other amount equal to that amount as a settlement from the Town. In a decision by Town Counsel, it was determined that Officer Leary was entitled to the money; the Board must investigate why this decision was made and exactly what the money represents.
L. Colten suggested that Mr. Sacco be invited to the next meeting to review this issue. J Yacobucci suggested a written opinion, however it was pointed out that the Board had already requested and received a written opinion, on which they could not agree. On a motion by L. Colten and seconded by D. Brooker, the Board voted unanimously to invite Attorney Sacco to the next meeting.
The Board reviewed the Division of Administrative Law Appeals (DALA) decision from the December 8, 2004 hearing in the matter of Gary Taylor v. Hull Retirement Board. The case was remanded to the Hull Retirement Board with instructions to arrange for the instant medical panel to re-examine Gary Taylor. To this, on a motion by J. Yacobucci, seconded by D. Brooker the Board unanimously voted to request an appointment of a regional medical panel.
Citing a conflict, A. MacNaughton left the meeting at 10:00 a.m.
On a motion by D. Brooker and seconded by A. Flavin, the Board approved Donald DiMarzio’s Superannuation Retirement, Option B, with a retirement date of January 9, 2005. Mr. DiMarzio retired as a captain after 32 years of service with the police department in the Town of Hull. His creditable service included a purchase for military service, and his retirement allowance included the veteran’s benefit. Voted unanimously.
Note: Per the Board’s direction, the retirement allowance was calculated using all regular compensation reported on the approved payroll records. There is currently a dispute over a stipend paid to Mr. DiMarzio while he was acting chief that is to be resolved between the police department and the Town. Numerous attempts by the Retirement System to get a resolution of this compensation have gone unheeded; therefore the compensation will be considered final until otherwise notified.
The Board reviewed the current year-to-date trial balance and cash accounts’ reconciliation with a minimum of discussion, however it was noted that the total assets currently exceed $16 million.
Investments
The following monthly investment materials were provided to the Board:
Investors Fund Performance – Updated through December 2004
SSgA – Total Return through December 2004
Senior PRIM client service officer Mr. Michael Reardon will present the 2004 year-end results in the regular March meeting.
Old Business
D. Brooker discussed the home rule statute enacted by the Town of Richmond regarding elected officials not being eligible for retirement and health benefits if the regular annual compensation from the Town is less than $10,000 annually. He discussed the possibility of modeling a similar one for the Town of Hull. Current elected officials in the system would be grandfathered until no longer holding an elected position; i.e. continuing in the system after failing re-election would not be permitted. L. Colten suggested a possible article for Town Meeting, however requested information of how many officials currently would be affected. This will be on the agenda for the February meeting.
Retiree Howard Moog has begun receiving his retirement allowance, however owes the system for over a year of allowances he was receiving that he was not entitled. M. Bohinc will develop a repayment plan with Mr. Moog to begin in a few months and be evaluated periodically.
The process of gathering calendar year 2002 data for all affected members is continuing to begin the corrective action the errors in the calculation and deduction of required retirement contributions of 2% for all compensation in excess of $30,000 while ADP was providing payroll services. Progress is slow but steady.
New Business
MACRS has a new insurance provider - Amity Insurance Agency. M. Bohinc will contact the company regarding both fidelity and fiduciary insurance. The Board is required to have fidelity insurance; fiduciary insurance is optional, but highly recommended.
Although the new requirement is every two years, and the last time the process was done was as of March 1, 2004, year 2005 retiree affidavits will be mailed shortly.
Year 2004 1099Rs were mailed on January 18, 2005.
The Board read all informational mail:
PERAC Pension Newsflash
PERAC Memo #48/2004 – Option A and Option B factors
PERAC Memo #49/2004 – 2004 Disability Retiree Data
PERAC Memo #1/2005 – Data Verification for PERAC 2004 Annual Report
PERAC Memo #2/2005 – Effective Date of New Actuarial Equivalent
PERAC Memo #3/2005 – COLA Notice
Boston Herald – January 12, 2005 – Say State’s pension board…
Segal Bulletin – December 2004
Corporate Governance Bulletin
Pension Reserves Investment Management Board – Annual Report as of June 30, 2004
Actuarial Report – January 1, 2004
Letter – Tom Welch, President, MACRS – Appointment of Amity Insurance Agency
Announcement - Middlesex Retirement Educational Conference
PERAC Financial Bulletin – January 2005
The Board confirmed the next regular Board Meeting for Wednesday, February 23, 2005 and set Wednesday, March 30, 2005 for the following, both at 9:00 a.m. in the Selectmen’s Meeting Room.
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