File name: JAC Budget Hearings FY 13-14_20120120_131328.dcr Folder: C:\Documents and Settings\HAppropriations\Desktop\Recordings 52 ~ 1/20/2012 1:26:12 PM ~ Nicholas: Introduction of Senator Bebout.I will not vote on that itme because my son works for.... 1:34 ~ 1/20/2012 1:26:54 PM ~ Bebout: DKRW program: Coal to liquid diesel Clean coal task force, ..matching requirement, then to minerals committee. Adv Conversion Tech Program name change. Want to change the focus of the Clean Coal Task force. Technology is there, plants are up an drunning, makes sense to look at opportunities in WY. Plant 100 million cubic ft of gas will convert to 10,000 barrels of gas. Ratio has changed to 25, Feed study: preliminary opportunities, will spend 10-20,000 for a fixed cost to do th eeconomics then go to fiancing phase. Section 300 in front of you, PlanL Becoming advanced conversion task force: one time appropriation of 500,000 dollars, criteria set, up to company to come to the task force to be considered. Between 3 and 400,000 of capital. Next phase level to make sure economics sense, Then cometo the task force, up to 10 million matching grant. Three compnaies. Task force pass recommendations on to the Governor's office. He will say yea or nay. 7:17 ~ 1/20/2012 1:32:37 PM ~ Edmonds: 500,000 feed study, 10 million? 7:29 ~ 1/20/2012 1:32:49 PM ~ Bebout: 500,000 to evaluate the feed study then up to 10 million for matching grant. 7:53 ~ 1/20/2012 1:33:13 PM ~ Edmonds: 10 million? 8:04 ~ 1/20/2012 1:33:24 PM ~ Bebout: That is for the actual feed study. 8:19 ~ 1/20/2012 1:33:39 PM ~ Meier: pg 2 Regulatory issues, roughly 1 million under i, through v. 9:10 ~ 1/20/2012 1:34:30 PM ~ Bebout: 9:12 ~ 1/20/2012 1:34:33 PM ~ Meier: Regulatory issues: air quality permit, ... 9:29 ~ 1/20/2012 1:34:50 PM ~ Bebout: correct. School of energy Resources council, 9:55 ~ 1/20/2012 1:35:15 PM ~ Meier: Commercial scale facility. Do not build or begin a facility. This is engineering and cost out the plant,,capacity..get the engineering in this phase? 10:37 ~ 1/20/2012 1:35:57 PM ~ Bebout: Correct. Not a research request, the technology has been developed. 1.8 to 2 billion dollar poject, must have a good source of water. 11:25 ~ 1/20/2012 1:36:45 PM ~ Von Flatern: 500,000 to task force? 11:40 ~ 1/20/2012 1:37:00 PM ~ Bebout: Correct - change name to Adv conversion task force. 11:55 ~ 1/20/2012 1:37:15 PM ~ Von Flatern: task force will have grant money. Company will do their own study or school of energy. 12:17 ~ 1/20/2012 1:37:37 PM ~ Bebout: They do it themselves. 1/2 million to banker, enginnering firm to evaluate . 12:57 ~ 1/20/2012 1:38:17 PM ~ Von Flatern: RFP to us, they do study, then come to us, can apply for up to 10 million, just to get the engineering drawings done so 10 million into something mythical or not getting something at end? Guarantee? 13:46 ~ 1/20/2012 1:39:06 PM ~ Bebout: No guarantee. Smaller companies in WY do not have the money to throw at it. 14:13 ~ 1/20/2012 1:39:34 PM ~ Meier: Engineering studies, results from 10 million match, .....they go into financial markets with model specification and grade for plan. If that fell through, the state would have the benfit of the plan for nayone subsequent. Give 10 yrs to get financing and plant built, then it is open domain. 15:37 ~ 1/20/2012 1:40:57 PM ~ Bebout: Bill from committee talked about intellectual property. State will have intellectual property rightrs. 16:26 ~ 1/20/2012 1:41:46 PM ~ Von Flatern: Years and pay back. 16:41 ~ 1/20/2012 1:42:01 PM ~ Bebout: Money is now a loan, could put a time limit.... 17:19 ~ 1/20/2012 1:42:39 PM ~ Von Flatern: Projects sitting around. This money is pittance to GE, We need more guarantee that something will materialize. 17:56 ~ 1/20/2012 1:43:17 PM ~ Bebout: Business plan for Wyoming, not a test to see if it works, Putting in loan guarantee defeats the purpose. 18:34 ~ 1/20/2012 1:43:54 PM ~ Von Flatern: Power station in 12 years of development, known technology. X numbers of years guarantee of getting money back. 19:16 ~ 1/20/2012 1:44:36 PM ~ Bebout: Could do as you will in appropriations, want it to be agrant and paid back. Part of the debate, huge potential, why we are coming to the appropriation committee. 19:55 ~ 1/20/2012 1:45:15 PM ~ Von Flatern: Do not want it to be a loan, want some type of guarantee, can put in time limits 20:16 ~ 1/20/2012 1:45:36 PM ~ Hurless: Think this would be a significant amount of money for companies, way to accelerate project, Owners engineer does the due diligence. ....folks that I think will apply will be highly appropriated. some one has to make a judgment about a facility study. 22:29 ~ 1/20/2012 1:47:49 PM ~ Von Flatern: ARe we going to work on this, where money comes from, later? 22:46 ~ 1/20/2012 1:48:07 PM ~ fNicholas: Mark up issue. Minerals is asking us sto build it in. The minerals co-chairs have asked that knowing reaources are getting tight, this is third 10 millin one, make a slot for it. Has gone to gov's office, do not know what the letter says 23:46 ~ 1/20/2012 1:49:06 PM ~ Von Flatern ? 23:50 ~ 1/20/2012 1:49:10 PM ~ Nicholas: AML, money can be encumbered for ever 24:08 ~ 1/20/2012 1:49:28 PM ~ Esquibel: GF money being tied up. If in Governor's office, ....essentially a savings account? 24:38 ~ 1/20/2012 1:49:58 PM ~ Nicholas: One more item to be debated. Easier to put it in the budget process than later. Mineral projects, now is the time to do it, during mark up. 25:10 ~ 1/20/2012 1:50:30 PM ~ Bebout: Did not put a time limit. Std language it will revert in two years, 300 series. 25:35 ~ 1/20/2012 1:50:55 PM ~ Steward: Grants awarded through clean coal and technology, educational component research. 500,000 component. 10 millin becomming a partner with industry. How do you make that public benefit component, is it economic? Constitutional responsibility for public benefit. 26:51 ~ 1/20/2012 1:52:12 PM ~ Bebout: Looked at constitutionality. This is a plant ready to move forward so economic benefits, jobs and for the state. It is value added. Natural resources an keep it in the state. ANL did a preliminary study. 25 or 30% ROI, can supply that analysis. Trying to protect state funds which are at risk, benefits are huge. One time money for long time benefits. 28:36 ~ 1/20/2012 1:53:56 PM ~ Harhsman: Incentive in othre ways, like tax benefits on back side? 28:51 ~ 1/20/2012 1:54:11 PM ~ Bebout: Tax credits, hedges, Nothing in this excludes other incentives. 10 million on feed study, it will be the smaller companies. That is why looked at incentivization on the front side. 29:46 ~ 1/20/2012 1:55:07 PM ~ Harshman: Thought they were in Wyoming? 29:56 ~ 1/20/2012 1:55:17 PM ~ Bebout: One in Wyoming, one has moved to Wyoming, third one is outside of state, would move in and build. 30:17 ~ 1/20/2012 1:55:37 PM ~ Wallis: Clean coal task force created in 2007 to secure Wyomings financial future by securing the value of Wyoming coal. Appears to be an erosion into that. AML funds are a tax on our coal. Now coal compnaies are funding other .... Like to hear some of your discussion of how you came to this. 31:53 ~ 1/20/2012 1:57:13 PM ~ Bebout: Well awre of importance of coal to Wyoming . do not say natural gas. Say minerals and coal is a mineral. One companies may utilize a different coal gasification process. Value added, differential in spread between oil, natural gas and coal, shwos economics. Take advantage of economics. 33:14 ~ 1/20/2012 1:58:34 PM ~ Hurless: Clear understanding and committment of School of Energy with respect to coal. Legislature has allocated close to 30 million in research fudn which must be matched with projecgtss. Matching has gotten better over time. Task force moved from research ....how does funding impact coal and other resources. Partnership with GE,. DQRW, GE talks about what might be done at their plants. Cornerstone of school of energy resource strategic plan is conversion. Clear understanding about importance of converting coal long term to higher valued products. Problems: Time and large project, can not increment your way there. Western Research institute works with coal, best test facilities in nation, where the federal money was spent on research and where the coal comes from and it did not match up. Senator Byrd successful in moving money to West Virgina and... None in western part of the country. Western Research Institute. 37:08 ~ 1/20/2012 2:02:28 PM ~ Wallis: Gov's proposal of AML. 42.5 million taken away from coal industry and redirected to CO2 pipeline, natural gas filling stations,. Explain to constituents. It is a challenge. 38:22 ~ 1/20/2012 2:03:42 PM ~ Nicholas: Issue of AML utilization. Public concern of taking AML dollars to highway as though they are GF dollars. Every year I have gone through an election, half of my constituents complain that mineral industry is not paying their share of taxes and they should go up. So if you wer coal and the entitiy paying for most of our taxes for many years. If gas industry was not there, coal would be paying more in taxes. ENough votes to drive up severance taxes and all those taxes. The mineral industry is together in this, It is in your interest to keep a strong gas industry to share load of budget. So dependent on taxes from mineral industry. The stronger the gs industry is the more they can carry ... Diversify the economy into other areas to generate tax basis, or alternatively to build out caqpacity for oil and gas. For every dolalr of gas from enhanced oil recovery that is a dollar of tax revenue not coming from the coal industry. Coal lease bonuses are building schools. When we lose those, who will pay for schools. Wyoming residents choice of inc severance tax or an income tax.....When it comes to highways, using these dollars is not their purpose. Just as much interest in keepign robust gas industry . Question: What more can we do for the coal industry? Carbon sequestration, one company in state has secured all the resources. Gas guys...need CO2. What do we tell the coal guys? Wht are the other projects to help the coal industry. Any rquests from coal industry that we are turning down. 43:44 ~ 1/20/2012 2:09:04 PM ~ Bebout: Process is working, not every one coming to the taks force receives money, coal industry does not feel left out of that. 65% of ... 1/2 is from natural gas. We are the minerals committee, look at balanced approach which is beneficial to Wy. Available for the coal, sure it is . Grants to help, bonding from state of Wyoming, Have not thought of it as one or the other, have thought of it as both. Coal against gas at national levels I am against. 45:42 ~ 1/20/2012 2:11:02 PM ~ Nicholas: Things in our budget help gas industry: Merritt, Danbury, ....slap in the face to watch a commercial from the gas industry that is derogative to the coal industry. 46:33 ~ 1/20/2012 2:11:53 PM ~ Bebout: Chesapeak: I am opposed to those comments and competion between gas and coal. 46:54 ~ 1/20/2012 2:12:14 PM ~ Nicholas: Chesapeake not paying their share for roads and highways. ...don't help them. 47:23 ~ 1/20/2012 2:12:43 PM ~ Bebout: Room for both. 47:31 ~ 1/20/2012 2:12:51 PM ~ Hurless: Carbon storage: Carbon management instittue as part of school of energy research, completed a characterization well to 13,000 feet, well paid for substantially by winning competitive federal grants.. First step in looking at commercial scale carbon stoarage. DOE solicitation for small scale injection. DOE has 95 million, have a 11 million cap. We met all criteria, part of being near rock springs and pipeline. Only committed 33 million, funded three projects, did not even tell us we did not qualify. CO2 argument, putting it in the ground and not getting value from it. Substitute water for CO2 was proposal we made. zproduction crews don't always keep... I think what we;re looking at is dealing with a timing industry. I think we're swimming up stream at this time. Industry asked whatt we awnted We want a .... How wouls a commercial company deal with this . You can use water with a lot less water and... We are in a position with this to. We need to go find match. We found some and can find some more. We started gettinterested in CO2. Bankers are telling us that we don't know how long .... We need to find some natural CO2. A lot of people still thinking of CO2 dtorage. Gov's budget includes pipeline for this. Rock Springs shows lots of COz2 Powder River Basin has .... Conversion, Mandates arethings we need to think about. 1:00:54 ~ 1/20/2012 2:26:14 PM ~ Bebout: We haven't given up on carbon We are the largest producer of coal in the nation 1:01:58 ~ 1/20/2012 2:27:18 PM ~ Nicholas:We offer our status as a state. Having our state as a part,... attract other states. Coastal states will have.... 1:05:25 ~ 1/20/2012 2:30:45 PM ~ Bebout: Montanna made a huge mistake in the 60j's by imposing the large tasx on... Anything we do to support this 1:07:06 ~ 1/20/2012 2:32:26 PM ~ Nicholas: The companies that have already looked at gas to... Large companies aren't looking us 1:08:30 ~ 1/20/2012 2:33:50 PM ~ Bebout: The legislature .... in the late 80's Look at the benefits that came out of that. 1:09:49 ~ 1/20/2012 2:35:09 PM ~ Nicholas: If you are just giving them money for salaries but now we're talking about putting money Our gas liquids project--whether we get money just for salaries or a product. 1:11:49 ~ 1/20/2012 2:37:09 PM ~ Bebout: Paying engineers to develop a model. I We thought they would find "in kind" participation.. 1:13:50 ~ 1/20/2012 2:39:10 PM ~ Nicholas: We'll have a product and match with them "in kind" Is the study a $20 million one? 1:14:50 ~ 1/20/2012 2:40:10 PM ~ Nicholas: Are we matching cash or...If this is built in Rock Springs 1:15:49 ~ 1/20/2012 2:41:09 PM ~ Hurless: Certain requirements for site that it would go on. Usefull for the state to gather that information. Have business people look at this and see what their recommendations would be 1:18:18 ~ 1/20/2012 2:43:38 PM ~ Nicholas: You can only get the feed study if each of us put in the same anmount of money. 1:19:46 ~ 1/20/2012 2:45:06 PM ~ Bebout: We own the intellectual property. I think we are finding smaller companies to do this. 1:21:23 ~ 1/20/2012 2:46:43 PM ~ Nicholas: What is your commitment to Wyoming? At least you have one Wyoming company looking at it. They would stay here. 1:22:26 ~ 1/20/2012 2:47:46 PM ~ Hurless: Clawback. If a plant is built in Wyoming , Are you willing to stay in Wyoming? 1:24:15 ~ 1/20/2012 2:49:35 PM ~ Hurless: We have excellent engineers. 1:25:38 ~ 1/20/2012 2:50:59 PM ~ Bebout:: WRI has good engineers. We talk about Wyoming and say it's all for Wyoming 1:27:07 ~ 1/20/2012 2:52:27 PM ~ Neier: Looking on the internet and..... Sinfields in Dallas is building ..... 1:28:27 ~ 1/20/2012 2:53:47 PM ~ +++++++++++++++++++++++++++++++++++++++++++++++++++++++ 1:29:03 ~ 1/20/2012 2:54:23 PM ~ Bebout We are familiar with thier project We asked why they chose Alaska. They said because they showed interest. 1:29:57 ~ 1/20/2012 2:55:17 PM ~ Steward When we looked at the data center, what were their needs. We took care of that. When there is a need, we have taken care of that. This seems like we are getting into partnership with industry. 1:31:14 ~ 1/20/2012 2:56:34 PM ~ Bebout. The real world is that there is incentives. What makes this intriguing to me is the natural resources that we have . We get a lot of money from minerals in this state. I feel that we should invest in incentatives in industries that will again exploit our mineral resources 1:33:14 ~ 1/20/2012 2:58:34 PM ~ Nicholas Sometimes doing nothing is more riskier than putting money at risk. Large companies are looking at other areas of the country for varies reasons. More gas, labor force, infastructure of gathering lines.. Or the Gulf States say we will give you 100 million. There cames a time when the risk of doing nothing is the biggest risk. You guys are in large part guiding the SCR projects, carbon dioxice project., If you want to ask Rob about that, this would be a good opportuntiy to do that. 1:37:01 ~ 1/20/2012 3:02:21 PM ~ Wallis We have School of Energy partnership for $10 mill,,.............. for $10mill and then nothing. Are there no research projects going on. 1:37:55 ~ 1/20/2012 3:03:16 PM ~ Hurless After the initial research was done. An announcement , request for proposal. It couldnt be other Federal funds. A lot ot these projects were long term projects. About 30 mill. but not every year. That set of folks took their responsibilty seriously. But the source of that money was the clean coal taskforce. That is why you see it come to a halt. 1:40:48 ~ 1/20/2012 3:06:08 PM ~ Wallis Is there research projects going on now 1:41:29 ~ 1/20/2012 3:06:49 PM ~ Hurless, Yes 1:41:40 ~ 1/20/2012 3:07:00 PM ~ Bebout Some started and then pulled back and dropped 1:42:11 ~ 1/20/2012 3:07:31 PM ~ Nicholas We brought the bill forward and larglely The coal that was sitting there was from Wyoming. My proposition was $.05 to pay for research. The real money is at the end of the railline Having said that , I thought we had 5 - 10 mill/year for coal reasearch. 1:45:06 ~ 1/20/2012 3:10:26 PM ~ Bebout We have 1:45:16 ~ 1/20/2012 3:10:36 PM ~ Nicholas Was that AML money? 1:45:36 ~ 1/20/2012 3:10:56 PM ~ Wallis It shows 5.2 transfered out of Coal 1:45:59 ~ 1/20/2012 3:11:19 PM ~ Nicholas I'll find out. Our commitment is to continue that funding. 1:46:41 ~ 1/20/2012 3:12:02 PM ~ Bebout Nobody was requesting us to continuing funding. 1:47:16 ~ 1/20/2012 3:12:36 PM ~ Nicholas Lets find out whats happening. WE are doing all these carbon sequestration studiei. 1:48:13 ~ 1/20/2012 3:13:33 PM ~ Bebout They are such a huge attack . That is what we were hearing from the coal company. J 1:49:08 ~ 1/20/2012 3:14:29 PM ~ Esquibel You can see what the coal is doing to improve their infa structure 1:50:19 ~ 1/20/2012 3:15:40 PM ~ Harshman What do we.. Gov has another proposal. Maybe we do all the above. 1:51:00 ~ 1/20/2012 3:16:21 PM ~ Becout Thank You. We are standing by and will do all we can. 1:51:24 ~ 1/20/2012 3:16:44 PM ~ 1:52:07 ~ 1/20/2012 3:34:46 PM ~ Steve: Retirement call back. You asked for followup. Asked us to work iwth A& I, Handout on investment, 1:53:30 ~ 1/20/2012 3:36:09 PM ~ Berger: Answer questons in any format. 1:53:43 ~ 1/20/2012 3:36:22 PM ~ Wiliams: Series of Questions: 1st; Investment return of 8%; page 3 of handout176; study published in 2011, 70 of 126 have 8.0% or higher. Attachement number 2 WRS Allocation. 2012 assumptions compared to 2011 decreased ...8% expected rate of return, if leave as is now, 30 year rate of return. Investmetn team responsible for modifying investments within targets set by board. Expectations that we will change asset allocation. ex: private equity which can potentially provide superior returns. 7.8% is long term projection of investmetn rate of return. (Attachemtn 2: New England pension Consultants 2012 Returns Projections.) 1:59:00 ~ 1/20/2012 3:41:39 PM ~ Willimas: pg 4 , under tab 3. GRS has shown us that for the deviation of each 10 points, there is an impact of 35 basis pointson paryoll or 35 milion. Perform at 8% or better, would have us at a break evn point .. Bottom of page 4, board recommended New Tier of Benefits with varying return assumption. Investment consultations suggesting 7.8% without active management. ARI, on a watchlist, 2:01:42 ~ 1/20/2012 3:44:21 PM ~ Pedersen: Actual study on appendix A, Assumed asset return sensitivity, In original book, had within basic valuation, ..normal retirement...arr of 8%. Study 8 and updated study 8 are what would happen if the senate bill made it all the way through. Updated numbers affecting current valuation seperate if bill passed. Study 3 should be the 7 1/2% return. Study 3 would reflect 7.5% and if the bill did not pass. Where are we currently? 2:04:30 ~ 1/20/2012 3:47:09 PM ~ Williams:; Updated study 8 and study 1, 2. assumes a zero asset rate of return. Study ...do not have actual results...think willbe flat. 2:05:26 ~ 1/20/2012 3:48:05 PM ~ Pedersen: 2.12 current benefit multiplier, shoudl be in updated 8, call it study 3 with a 7.5% return with no change in the first three. 2:06:01 ~ 1/20/2012 3:48:40 PM ~ Harshman: Tab 4, Study 8, updated study *, study 1, study 2. ?? 2:06:36 ~ 1/20/2012 3:49:15 PM ~ Pedersen: Rate and senate file. 2:06:48 ~ 1/20/2012 3:49:27 PM ~ Harshamn: What the 7.5% looks like now and if the sentate bill passes. 2:07:12 ~ 1/20/2012 3:49:51 PM ~ Williams: Actuaries working on response of fiscal note, 2:07:42 ~ 1/20/2012 3:50:21 PM ~ Nicholas: Cost of request? 2:07:51 ~ 1/20/2012 3:50:30 PM ~ Willimas: a few thousand, ...the other between 80 and 100,000 dollars. Have received no funding or rquest. 2:08:17 ~ 1/20/2012 3:50:56 PM ~ Nicholas: Timing and fiscal impact of Pedersen's request. 2:08:31 ~ 1/20/2012 3:51:10 PM ~ Williams Guess: 3 weeks have these rerun; the cost about 10 to 12,000. 2:09:10 ~ 1/20/2012 3:51:49 PM ~ Nicholas: Worth 10 to 12, 000? 2:09:20 ~ 1/20/2012 3:51:59 PM ~ Pedersen: What I originally asked for, think it is important to make assumption nothing will happen, and use 7.5%. COLA discussion, missing the 8 is an important piece, Exhorbit number, want to be a good fiduiciary, better to be educated, can not imagine that to change 3 numbers on an excell spreadsheet would cost 12,000. look at new person to run these. 2:11:03 ~ 1/20/2012 3:53:42 PM ~ Williams: based on past requests, illustrations could be part of more comprehensive study and could be folded into that cost, Committee's decision, will absorb the cost if you want to see it. 2:11:39 ~ 1/20/2012 3:54:18 PM ~ Meier: Changes, developed a matrix. Each had an additive or effect of the funding ration. Could get within 1% if we went back to the matrix and just prepared the two..close enough to make decision.. What will that information lead us to as far as a decisino? What does that tell us to do? 5% deviation, what does it tell us to do? 2:13:07 ~ 1/20/2012 3:55:46 PM ~ Pedersen: I am comfortable with doing a comparision like that. At 5% deviation, in 2015, actuarilly unfunded. With 7.5% at 2015, we are at 65% unfunded. 2:14:28 ~ 1/20/2012 3:57:07 PM ~ Edmonds: That is what Pedersen asked for. Did not hear request in public hearings for info if bill passed, heard request from Pedersetn. 2:14:55 ~ 1/20/2012 3:57:34 PM ~ Summers: Working off handout that assumed different benefits were in place. I do not rememer you asking us to do this with benefits asthey are currently in place. Pedersen: Not malicious, comfortable to get my own info. 2:15:53 ~ 1/20/2012 3:58:32 PM ~ Edmonds: What did it cost to get this information? 2:16:01 ~ 1/20/2012 3:58:40 PM ~ Nicholas: Pedersen asking for info, for input, should not cost that much. Folks support moving to defined contribution plan, closing the current plan. Assumption in not providing info. to those folks is assumption that you do not want to move that direction.. Do not wan to hear that you spent 200,000 to provide info to JAC. Be judicial. By not providing the info, can make arguement that it will show what they want it to show, which is go bust. 2:18:13 ~ 1/20/2012 4:00:52 PM ~ Williams:: Have spent a sign. amount of money with this firm, gives us leverage, will request the information. This reflects what we thought the request was. Will call firm. Consulting fees, GRS and other firms are almost doubling because of GAAP accounting rules, expenses for member agencies as well. 2:20:30 ~ 1/20/2012 4:03:09 PM ~ Nicholas: costs of defined benefit plan.... 2:20:50 ~ 1/20/2012 4:03:29 PM ~ Pedersen: I do not think there is anything nefarious or malicious. We asked for a lot of things. 3 ring binder. I completely agree with Tom wiliams about the mathematical numbers, just came to a different policy decision.. Clear that I do not believe there was a purposeful withholding of information. 2:22:05 ~ 1/20/2012 4:04:44 PM ~ Nicholas: What we ask for now, will not be available for the mark up. It will be for the session, two bills out there, okay with getting prepared for the session, info requested now won't be available for mark up. No apology, fiduciary responsibility, asking for things that make a difference. Off of that topic 2:23:30 ~ 1/20/2012 4:06:09 PM ~ Meier: astrick: The 30-year GASB ARC represent the state share of the contribuitons...to fund the Plan. AT 100% or any % other than the funding ration in the studies. Are employee rations the same % or do they stay the same. 2:24:26 ~ 1/20/2012 4:07:05 PM ~ Williams: Same employer and employee contributions, remain the same.. 2:24:43 ~ 1/20/2012 4:07:22 PM ~ Meier: 15.3% in 2040/ 2:25:00 ~ 1/20/2012 4:07:39 PM ~ Summers: No change in contribution rate, stays at... The employer pays 7.12. When it says 8.42, that is an increase. 2:25:52 ~ 1/20/2012 4:08:31 PM ~ Meier: Not that we are doing this but what we need to do to be acuarilly sound or raise it in Study 8. 2:26:17 ~ 1/20/2012 4:08:56 PM ~ Esquibel: Next tab, hypothetical retirement . Can we go back 10 years and see what would have happened if we had gone to a defined contribution plan? 2:26:56 ~ 1/20/2012 4:09:35 PM ~ Williams: Have not gone back to do that. Number of assumptions impacting that result. Markets, weighting of market, classes of securities, Tab #5, whatdoes a typical member of the retirement plan put into system versus twhat they get out? AVg. age. aservoce. sa;aru. cpmtrobitpm b;amce. [rpkected fprward tp retore,emt/ Va;ie pf bemefots at retore,emt/ At age 60. 444.900 amd 641,100 at age 65. Below 5% interest credit rate. difference of 193,500 is what they would get out more than what was put in. Illustration of coment that people get out significantly more than what they put in. 2:29:55 ~ 1/20/2012 4:12:34 PM ~ Harshaman: Past studies, did not see changes in money put in, funded ration. How would employee contributions...wages frozen so state put in contributions. Now good wages and low contribution rate 2:30:49 ~ 1/20/2012 4:13:28 PM ~ Williams: Contribution rate of Dec 1, 2010, inc employee share by 1.43%. 1.56% inc would put the plan on solid footing. 2:31:20 ~ 1/20/2012 4:13:59 PM ~ Harshman: Solid footing definition? 2:31:28 ~ 1/20/2012 4:14:07 PM ~ Williams: Answer.... 2:31:36 ~ 1/20/2012 4:14:15 PM ~ Harshman: Huge decision. Employees, person on street would say they should put more into their retirement. 1.43 to 1.56, doubled to 4.5. If folks understand we need to increae contribution and decrease benefit multiplier. Are those biggest drivers? 2:32:59 ~ 1/20/2012 4:15:38 PM ~ Williams: Investment earbning are also signficant component. Discussion, full unaminity that to preserve the system, would inc contributions.... 2:33:52 ~ 1/20/2012 4:16:31 PM ~ harshaman: Why weren't those optiosn brought to us? 2:34:02 ~ 1/20/2012 4:16:41 PM ~ Williams: I do not know why. We can develop those, which are reasonable alternative to change to defined benefit plan. 2:34:42 ~ 1/20/2012 4:17:21 PM ~ Williams: Can get that info, need to show alternatives in full, cheaper to run them comprehensively than to finish a set and ask them to change elements of it. 2:35:26 ~ 1/20/2012 4:18:05 PM ~ Harshman: Comment 2:35:36 ~ 1/20/2012 4:18:15 PM ~ Esquibel: 5 new on the committee. Report given to us in Dec from 2011 meeting. At one point, Mr. Summers asked to hypothetically comment on retirement system going to defined contribution plan. You said the expense to the statewould outweigh the benefits. Re elaborate? 2:36:33 ~ 1/20/2012 4:19:12 PM ~ Summers: probably said, that at any time you close the defined benefit plan, the current participants, employers and employees would be looking at an increase contribution rate, amortize over a shorter level. Knowing the cost to close the plan is an important piece, should be done before decision. 80 to 100,000 actuaries said they would need and in 3 to 4 months. 2:38:03 ~ 1/20/2012 4:20:42 PM ~ williams: 6 months to get report, Other funds have done this assesssment for other public penson funds, Increase is generally between 10 and 20% increase in contributions. 2:38:51 ~ 1/20/2012 4:21:30 PM ~ Esquibel: Interim study 2:39:07 ~ 1/20/2012 4:21:46 PM ~ Edmonds: Need information, bills pending with gaps in them, hesitant to inc. contribuitons when do not know how solvent the plan is. Information is power. Need to have it, the cost does not matter, talking about a lot of money. 2:39:56 ~ 1/20/2012 4:22:35 PM ~ Williams: Update on firefighters pension. Underfunding of plan. DRS calculated a lump sum of 57.6 to 67.9 million. Asked to deterimine if money went into state auditors acct, 79.5 million and 9.2 million under same assumptions, no interest income. 2:41:28 ~ 1/20/2012 4:24:07 PM ~ Williams: Attachment 7, Attorney General opinon. Any remaining money under Plan A would go to Plan B. 2:42:09 ~ 1/20/2012 4:24:48 PM ~ Williams: Volunteers retirement: Attachemtn 9, uncover original studies, shows that 978,200 dollars originally funded was for 2009 adn 2010 bieenium. Indication in material of additional, on oing responsibilities Current appropraiton depleted in 4 years, time to figure out nogoing funding source. 2:43:36 ~ 1/20/2012 4:26:15 PM ~ Williams: Page 6, year by year. appropriations by legislature by year. Page 7 of initail presentation. 2:45:19 ~ 1/20/2012 4:27:58 PM ~ Williams: Not asked for but provided was COLA information. 2:45:42 ~ 1/20/2012 4:28:21 PM ~ Willimas: Pg 10 of letter. Microfishe, microfish, accept that digital is more modern, concern is data corruption. We back up daily, pretty much hourly. Corruption would not affect our retrieval, Digital is more efficient, less storage and more efficient to retrieve data. Have not used microfishe since 1999 2:47:40 ~ 1/20/2012 4:30:19 PM ~ Williams: Expense org and... 2:48:13 ~ 1/20/2012 4:30:52 PM ~ Summers: Investment team in seperate, handout #184. , budget office reworked benefits we originally asked for. First set of columns originally rqeuested, 3 positons presented are salaries requested for it. If we are going to do that, Board comment, If break team out, put executive director positions in same org because he spends 35% of his time with the investment team. Recommendation to keep that relationship. Willing to pay salary level to consultents, then pay a comparable salary level to our executive directo. Attempts in past to get a salary raise. Gov approved these raises, higher than 2010 or what we suggested, Consider allowing the board to make the final decisin as long as we stay within the budgeted amount. Salaries are off the chart, request goes straight to the Governor. Asking for autonomy for this E org. Add ED to that, restore other seniro investment officer the governor removed. Issues we have. 2:53:10 ~ 1/20/2012 4:35:49 PM ~ Pedersen: 2:54:16 ~ 1/20/2012 4:36:55 PM ~ Summers We need to establish our relationship with........... We are not asking you to consider all that. What you basically have to do is exempt us. The only other thing is that I would like you to consider all the reductions. 2:55:54 ~ 1/20/2012 4:38:33 PM ~ Nicholas Okay, thank you very mcuh.