Old Saybrook Pension and Benefits Board October 24, 2013 Meeting: Minutes
Members Present: Suzanne Taylor, Eileen Torrenti, Ray Muratori, Gary Lehrman, Carol Voigt, Steven Sheehan, Absent: Carl Fortuna
Others: Tom Forma, Kevin Nichols of Merrill Lynch, Mark DeVaul of The London Company, Richmond VA via speaker phone, Pauline Kezer, Kezer Consulting, Sharon Migliaccio, Maureen Reilley
The meeting was called to order at 7:07 p.m. and guests welcomed. Also announced was the arrival of our new secretary, Maureen Reilley. Her appointment having been approved by a prior vote of the Board. An Executive Session was requested by Suzanne Taylor for procedural and personnel matters. Motion so made by Steve Sheehan and seconded by Gary Lehrman. Approved. No further motions were made after the close of the executive session and the regular meeting resumed at 7:28 p.m.
Carol Voigt made a motion to accept the minutes of last meeting, seconded by Steve Sheehan. The motion was approved by all.
Financial Reports
The London Company: Mark DeVaul, Portfolio Manager/Analyst spoke to the board via speaker phone. Mark explained the make-up, philosophy and strategy of the company, which was founded in 1994 as he reviewed a handout that was given with the presentation containing a description and introduction to his company and explaining their focus on Small Cap Core investments. Discussion also ensued re their initial performance for the 2013 third quarter. Re the issue of dividend yield it was learned that it concerns about 1.5% of the earnings. In conclusion the review showed that since taking over management of some of our funds (since August) they are up 1.4%.
Merrill Lynch Report: Tom Forma and Kevin Nichols presented the board with an overview of all our investments. 2 spiral bound books detailed monthly and yearly results showing an overall result for the calendar year up 10.27% and 3.85% for the 2013-14 fiscal year for the Pension Funds. As of October 23rd there is $18,270,204.00 in the Pension funds and $982,330.00 in the Health Care Reserve fund.
Concern with how to do better with the Health Care Reserve required investment of 50% in bonds, will be further addressed with some recommendations expected for the November meeting. It was noted that International investments are doing well and we will hear from our International Investment Company, Invesco, at next month’s meeting.
Tom Forma also discussed two articles with the board concerning Unfunded Pension Liabilities. The major article by Eaton Vance focused on the relationship of both pension and health care liabilities on municipal credit quality. For the fiscal year ended 6/30/13, the Old Saybrook pension managers earned 13.96% vs. 12.43% for the median public pension fund (reported in the N.Y. Times article). The conclusion reached was that the majority of municipal credits are in good shape. Suzanne pointed out that the Old Saybrook pension plan’s unfunded liability is reasonable at 83%. More improvement should come about in a better investment climate and increased contributions from the town.
The Blue Cross funds formerly under management by the Pension Board have now been co- mingled with the town fund and are now in the town’s sweep account at Liberty Bank. This action was voted on and approved at the September board meeting.
Chair’s Report
Suzanne prefaced her report with a review of the Board’s annual report completed in July and due to be released shortly along with all other town reports. In particular she focused on the areas to be upcoming in the forthcoming year. She noted the increase in our pension funds as well as our forthcoming study to analyze how to improve and or change our current pension and health insurance plans.
She also reported that Ray Muratori, Carol Voigt, and she will be attending the forthcoming Connecticut Public Pension Forum in Rocky Hill next Thursday.
The 457 Plan
Gary’s report about ICMA indicated that the total amount of funds in the 457 plan equaled $1,055,309.40. Total active membership equaled 32, with a sign-up gain of 4 and 2 non-active members signed up and 1 terminated, netting a gain of 1 to 2. The ICMA educational session on October 8, 2013 had approximately 7 in attendance. Laura Hancock, from ICMA, seems to be doing a fine job in servicing our account. A copy of the report is attached.
In reference to adoption of the 457 plan by the Fire Department a meeting was held with Laura Hancock of ICMA, with Gary, Suzanne and Fire Chief JT Dunn in attendance. It appeared that it would be possible to send tax free money on behalf of firefighters up to the amount of their credited tax waiver. After that meeting, Carl Fortuna, the First Selectman, sent a notice about his further review of the matter which found in the state statute an ordinance stating “that an abatement is not cash in hand to invest. It is a real property credit which is more in line with what an abatement is.” He concluded that since we don’t pay the firefighters actual money he does not see it as investable money.
The Board’s concern is that somehow the IRS has determined that this credit is taxable income and 1099’s are sent to firefighters to report this credit as taxable. Steve Sheehan has agreed to review the matter further with his colleague Don Brodeur as to the rationale behind the taxation of the credit. Suzanne reported that Chief Dunn accepts the opinion of Carl Fortuna and the board concurred that the matter is moot for now.
In other reference to the Fire Department Suzanne reported that all the data needed for their valuation has been received by the Actuary and the report may be ready for the Nov. meeting.
Also the joint meeting between Suzanne and the Chief to update the current pension plan document has had to be postponed until November due to mitigating circumstances.
It was noted that Board Members should have received copies of the descriptions provided by Brown and Brown for the 3 different types of health insurance plans currently in force for town employees. A brief discussion concerning the differences between the basic HMOs and HSAs ensued.
A brief presentation concerning the CADR (Call a Doctor Plan) was given by Pauline Kezer and members had a chance to ask numerous questions. One interest concerned the possibility that if this program reduced the need for more expensive health care than health care premiums might also be reduced. That answer is not yet known definitively.
Actuarial Matters
Suzanne reported several bills totaling $3,749.50 were submitted by Milliman. A question was asked as to how much we have spent this fiscal year. Suzanne answered that she could not determine as she had not received any of the customary budget expenditures, which were usually mailed out to her in prior fiscal years. A motion was made by Steve Sheehan and seconded by Ray Muratori to approve payment. All were in favor. The bills were hand delivered to the Accounting Supervisor, who was present at the meeting.
It was also noted that our actuary, Steve Lemanski, will be present on Nov. 21st to discuss our pending study of optional pension plans as well as to talk to us concerning the progress of both the town and fire department pension plan valuations.
Suzanne presented the proposed calendar for the 2014 Old Saybrook Pension and Benefits Board meetings, which was unanimously approved by the Board members. Meetings will continue to be on the fourth Thursday of the month, except for November, which will be on the third Thursday due to Thanksgiving. A copy is attached.
Two Executive Session Items were agreed upon to be placed on the Nov. 21st Agenda
First will be an Executive Session to discuss the status of the part time employment of retired police Lieutenant McDonald as a School Resource Officer.
And second will be an Executive Session to discuss our appointment of a Retirement Plan Administrator and its relationship to Accounting Department Personnel.
There being no further business Steven Sheehan made a motion to adjourn, which was seconded by Carol Voigt and all approved. The meeting ended at 9:30 p.m.
Minutes submitted by Maureen Reilley
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