MINUTES OF THE MEETING OF THE GENERAL EMPLOYEES PENSION BOARD, SEPTEMBER 19, 2011 Present: Chairman Mike Taylor, Treasurer Christopher Lyons, Secretary Pamela Nadalini, Trustee Barry Keeler, Trustee Susan Kosko, Trustee Gretchen Schneider Absent: Vice Chair Cheri Potts Others Present: Plan Member Ryan Chapdelain, Vice Mayor Terry Turner, Attorney Scott Christiansen, Pension Plans Administrator Benita Saldutti, Pension Analyst Gail Loeffler, and Staff Member Diane Torres CALL THE MEETING TO ORDER Chair Taylor called the meeting to order at 8:30 a.m. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF AUGUST 15, 2011 Treasurer Lyons stated that the discussion of the assumed rate of return in the minutes should be modified, specifically the paragraph which discusses fiduciary responsibility. He continued that the Attorney's answer to his question should be added to the minutes. Ms. Saldutti stated that Chair Taylor also has proposed changes to the minutes, sO they will be brought back to the Board for approval at the next meeting. APPROVAL: EARLY RETIREMENT BENEFIT FOR NANCY CRAWFORD, DROP REQUEST OF LARRY HOBBS Ms. Saldutti stated that Nancy Crawford has requested Early Retirement effective September 1, 2011, that she is 63 years and 10 months of age with 12 years of service, and has selected the 15 Years and Life Option. Ms. Saldutti stated that Larry Hobbs is requesting DROP retirement effective January 1, 2012, that he is 65 years of age with 20 years and 2 months of service, and has selected the Normal Lifetime option. On a motion of Trustee Susan Kosko and a second of Trustee Gretchen Schneider, It was moved to approve the Early Retirement benefit for Nancy Crawford and the DROP request of Larry Hobbs. Motion passed unanimously. STATUS REPORT: DEFINED CONTRIBUTION PLAN Ms. Saldutti stated that the ordinance creating the new Defined Contribution plan and closing the existing pension plan to new employees hired on or after September 7, 2011 September 19, 2011 1 was passed by the Commission on September 6, 2011. She continued that the required documentation has been sent to VALIC for signature. PROPOSED ORDINANCE TO AMEND PLAN Ms. Saldutti stated that the Defined Contribution (DC) plan is in effect for general employees hired on or after September 7, 2011 and not the general employees hired prior to September 7, 2011. She continued that Staff is drafting an ordinance to amend the Defined Benefit plan incorporating the modified benefits. She continued that the draft ordinance has not yet been distributed because it is still being reviewed by the attorneys. Chair Taylor questioned the proposed timeline. Ms. Saldutti stated that Staff anticipates introducing the proposed Ordinance to the Commission November 7, 2011, with the public hearing on November 21, 2011 with January 1, 2012 as the effective date of the changes. Ms. Saldutti presented the following proposed additional amendments: Section 24-98, Board of Trustees: Eliminate designated seats and extend the terms to four years for the four elected Board members, Trustees Schneider and Keeler expressed concerns with eliminating of designated seats as members of the pension plan outside City Hall may not be as well informed of pension issues. Ms. Saldutti stated that an item for discussion will be brought back at a future meeting. Section 24-117, DROP: Allow an elected Trustee to complete his or her term after becoming a DROP participant but not be eligible for re-election, and Chair Taylor noted no objection to the proposed Amendment to Section 24-117. Section 24-104, Option Forms of Pension: Eliminate three-quarters and two-thirds survivor options under the Option to change joint annuitant and the Pop up options, and eliminate the 10 Years and Life option. Ms. Saldutti stated that these proposed changes must be presented to the union. Chair Taylor noted consensus to allow Staff speak to the union regarding reducing the options for retirement. Section 24-107, Disability Benefits: Ms. Saldutti recommended changing the requirement to review disability pensioners every two years to periodically" to allow more flexibility. September 19, 2011 2 Following a brief discussion concerning the current process for review of disability pensioners, Ms. Saldutti stated that proposed language will be brought back to the Board for consideration at a future meeting. RESIGNATION OF TRUSTEE MIKE TAYLOR AND SPECIAL ELECTION Ms. Saldutti stated that Chair Taylor has submitted his resignation as a member of the General Employees' Pension Board effective October 31, 2011. She continued that the seat is designated for an employee working at City Hall. She continued that Ryan Chapdelain was the only nominee SO a full election is not necessary. She continued that an item to approve the results of the election will be placed on the agenda for the October 17, 2011 meeting. OTHER MATTERS Assumed Rate of Return Treasurer Lyons stated that the Police Pension Board lowered the assumed rate of return to 7.75%. He asked if the General Employees' Pension Board is willing to consider to lowering the assumed rate of return to 7.75%. Trustee Schneider requested that financial background showing the implications of lowering the assumed rate of return be provided. Trustee Kosko stated that the responsibility of the Board is to ensure sufficient money is available to fund the retirement for all general employees. Treasurer Lyons stated that he can provide general information; however, investment managers should be invited to participate in the discussion if more specific information is desired. Ms. Saldutti stated that the actuary has already provided information indicating that each 0.1% reduction will increase the City's contribution by approximately 1% of payroll. She continued that the Board should proceed with caution as the number of general employees which will be converting to the Defined Contribution plan is not known at this time. Secretary Nadalini stated that an item to rescind the previous action taken by the Board can be placed on the agenda of the next meeting. On a motion of Treasurer Christopher Lyons and a second of Trustee Susan Kosko, it was moved to place on the October 17, 2011 agenda an item to rescind the motion to lower the assumed rate of return from 8.3% to 8%. Motion passed by a 4-2 vote with Chair Taylor and Secretary Nadalini voting no. September 19, 2011 3 Next Meeting The next Regular Meeting will be October 17, 2011 in the City Commission Chambers. ADJOURN The meeting was adjourned at 9:10 a.m. Michael Taylor, Chair Pamela Nadalini, Secretary September 19, 2011 4