MINUTES
SPECIAL MEETING
OCTOBER 19, 2010
First Floor Conference Room
Old Saybrook Town Hall
CALL TO ORDER Chairman, Carl Fortuna, called the Special Meeting of the Board of Finance to order at 7:00 P.M.
Attendant Members Absent Members
Carl Fortuna, Chairman Lee Sparaco
Grant Westerson Sonny Whelen
David LaMay
Barry O’Nell
John O’Brien
In Attendance
Bob Fish, Treasurer
Carol Manning, Selectwoman
Tom Forma-Forma Consulting Group
Sharon Migliaccio-Secretary, Pension & Benefits Board
Dennis Guay-Member, Pension & Benefits Board
Suzanne Taylor-Chairperson, Pension & Benefits Board
JT Dunn, Fire Chief
Gerri Lewis, Clerk (7:50 p.m.)
Suzanne Taylor began the meeting with an overview of the Board. The annual report indicated that the Town’s pension was underfunded by approximately1.3m (16.8 liability vs 15.3 assets), much of this as a result of the market dip in 2008. The post-retirement health care benefit liability is somewhere around 10m, and is funded at about 750k, monies that were placed towards that by the Anthem demutualization.
Ms. Taylor then spoke to the Fire Dept pension, which began in 1994. Ms. Taylor told the BOF to look at this pension like a 30 year mortgage on which the Town is providing level funding of about 65k per year, which answered
Mr. Westerson’s question re: future contributions by the Town. Currently it is funded at about 50%, but is on target to be fully funded with the current amount of yearly contributions. Firefighters are vested at 10 years, fully vested at 25 years and able to begin collecting at age 65. The firefighters are on a point system to determine whether each year is a qualifying year as was explained by JT Dunn, Fire Chief. He also went over the extensive record keeping the department keeps in this regard.
Ms. Taylor cited pages from the Performance Portfolio Review (PPR) showing how the plan is down because of the bad market performance in ’08. However, the plan is 90% funded, which is satisfactory at this point. She spoke to the GASB requirement that the Town must now count Other Post-Retirement Benefits (OPB) which include post-retirement health care, which is the 10m number previously referenced. Mr. LaMay pointed out that Post-retirement health care has now been eliminated for Town Employees and asked Ms. Taylor whether that means the 10m number should do nothing but come down. She agreed that is the case.
Mr. Forma then spoke to the Town’s portfolio. Page four (4) of the PPR showed the Town’s Asset Allocation Overview. He then jumped to page thirteen (13) of the PPR to show relative performance of the fixed income portfolio from 07-10. Mr. Fortuna asked if Mr. Forma’s consultancy is ever put up for an RFP. The response was no (he has been with OS since 1987). However, his role is assisting the board in finding the best firms to invest with for the Town for the risk profile that the Town assumes. In other words, the RFP’s are with underlying firms, not investment manager. The Board will then interview managers and choose from them. The Pension Board is not bound by any laws as to how they can invest or with whom. They can invest in 100% stocks if they so choose.
Mr. LaMay asked if the results are net of fees. The answer was yes. Fees are 0.9% on equities and 0.4% on bonds. Mr. LaMay asked a performance question on how the results of Old Saybrook are judged: to benchmarks or to some other standard.
Ms. Taylor said her board had just recently reviewed the Town’s investment policy. She asked Mr. Fish what he does with the Town’s cash. He answered that the Town has a sweep account at Liberty where a negotiated rate was given. Ms. Taylor also stated that her board deals with the administration of
benefits and gave much credit to Sharon Migliaccio. She stated she feels there should be additional staff to handle these things.
Mr. O’Brien asked how the Board recommends amounts that should be funded into the pension and health accounts. Ms. Taylor responded that the actuary (Milliman) makes recommendations which her board then considers. She stated, and Mr. Guay concurred, that the Town should be making more than a 6% contribution, which has been the amount recently.
There was some discussion about:
- whether defined benefit plans were better for the municipal employees or whether a conversion to a 401k style plan would be beneficial.
- This years GASB audit and whether a partial could be done to save some money.
Ms. Manning stated her concerns about the underfunded OPB’s. Ms. Taylor stated that the bond rating agencies and the actuary are thrilled that the Town has made any contribution at all because so many States and Municipalities have not contributed anything.
Motion: To adjourn at 8:30 p.m.
Moved: G. Westerson Second: B. O’Nell
Discussion: None
Approved: C. Fortuna; D. LaMay; G. Westerson, J. O’Brien, B. O’Nell; 5-0-0
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Respectfully Submitted,
Carl Fortuna, Jr.
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