File name: JAC Budget Hearings FY 13-14_20111206_080335.dcr Folder: C:\Documents and Settings\HAppropriations\Desktop\Recordings 0 ~ 12/6/2011 8:15:09 AM ~ 36 ~ 12/6/2011 8:15:45 AM ~ Tuesday December 6, 2011 Agency 072 Retirement System Thomas Williams, Director 1:11 ~ 12/6/2011 8:16:20 AM ~ Madam Chairman Berger checks with Bill Mai 2:38 ~ 12/6/2011 8:17:46 AM ~ Berger: Good morning, Agency 72 W 3:18 ~ 12/6/2011 8:18:26 AM ~ Williams: Good morning. Executive director, brief update on status of retirement system, present budget proposal and bills that will impact. Introduction of board, steve summers, chair of retirement, Laura Labb, chair of investment committee; treasuer Joe Myer and Steve Wolfe, Harry Wells, Polly Scott, Introductory remarks: status of program, communications activity and investments Capabilities have strengthened, greater internal and external control, new procedures and rules, increased efficiency and accuracy, technology modernization project named RAIN Retirement and Investmen Network, Forecast that project would cost. approx 15 million, allocated half of that amount, pleased to report that the project is ont time and under budget..estimate total cost of 10 million, including enhancements, slightly out of scope. 2/3 of forecast Communications: Enhanced at all level, JAC, governor's level, website and newsletters, EducationL Emphasized within and outside of organization Communications: Towards member agencies, Wyo ED assoc, wyo empl assoc, wy ret assoc, members of orgs facing plan changes... Professional Investment Team: determine fiscal health and longevity of system. Invite Laura Labb 9:37 ~ 12/6/2011 8:24:45 AM ~ Labb: Investment Committee Chairman, Repositioning system: development of professional investmen organization, background, basis of budget request, organization is in progress, Tom brought on 3 yrs ago, then chief inv. oficer Within last 2 years staff has expanded to 3, analyst and senior inv officer position Third party review of how to build this invest. org for long haul, recruit and retain qualified indiv. meet 8 % hyurdle rate, Market today: increased level of volatility, difficult to reach 8% rate of return, inc complexitiy, more global market place, team working to reposition to address complexitites of market place, Look at portfolio, see a broader classification of investments to bring volatility of portfolio down. Today a team of 2 with more active investment committee, not a team positioned to be successful over long term with current size and compensation level...we do not compete request for ability to compete, not to be the highest and best paid, just to compete, asks for additional staff person so we can do due diligence to diversify . Can't offer no volatility or making 8 % rate, trying to position for the long term. 15:06 ~ 12/6/2011 8:30:15 AM ~ Labb: Third party work - Huett Iness P. govt consulting and investment firm to assist, peer groups, where do we need to be?, HIP works with 30 or 40 groups tells us ...strategic, final report by mid-January, reviewing draft, will meet before Christmas, intend consulting report to augment findings and will keep you abreast of report and key findings. does not appear that we will come and say we need 2, will not say we need less money. work they are doing supports finding. 17:22 ~ 12/6/2011 8:32:31 AM ~ Nicholas: Plan on you being a call back, to have an update when you get the report. before the mark up 17:49 ~ 12/6/2011 8:32:57 AM ~ Berger: comparision of retirement systems 18:10 ~ 12/6/2011 8:33:19 AM ~ Labb: peer set is 10 funds above and below us in size and a geographical 18:35 ~ 12/6/2011 8:33:44 AM ~ Berger: questions and thank you 18:44 ~ 12/6/2011 8:33:53 AM ~ Williams: Budget discussions? Harry Wells, executive director, interest in reducing GF core standard budget, money derived from system funds, study of 2, 5, 0r 8% cuts, some costs allocated to us, when we look at reductions as a percentage, it is even a higher percentage of what we propose, Exception budget requests: Listed in priority order on page 10 of budget response, First priority: computer programmer to support the new IT modernization, content and administration, catapult systems and icon contracted with, cleaning the system to make sure it is good data 21:37 ~ 12/6/2011 8:36:46 AM ~ Nicholas: Go page by page please, start back at page 5. statistics of work force, put in context, pg 6 membership plans, then contribution tables, do you mind? 22:42 ~ 12/6/2011 8:37:51 AM ~ Williams: Expected retirements, significantly impact our organization because it impacts work load of staff, current state of economy may alter that, inc participation in our plan at all levels, heightened effort and interest which results in inc. workload; Significant challenge to staff - can't have external people come in, 9 benefit plans....staff has spent over 4000 additional hours, have not increased staff, expect efficiences when system goes alive in Sept 13. Until then, overtime for implementation and testing, 25:25 ~ 12/6/2011 8:40:33 AM ~ Nicholas: As you comment on employment level, hard to sort out staffing rations with sizeable amts for management, same is true for Meyers when we get to his office, need an expertise level, related to outside managers, do more competent people reduce your fees , or is it a percentage fees. do management companies reduce costs? Managers to sort out what is happening. 27:00 ~ 12/6/2011 8:42:09 AM ~ Williams: number of impacts to bringing in staff to team, added initial expense, likely return on investment outweighs expense, Management fees: focus on keeping fees competitive, not a lot of flexibility on establishing in the mkt place, look at it when selecting managers, to hve a larger passive index component, avaialbe for very low fees, trying to reduce fees on a significant par of the portfolio, spend the fee money only where there is a performance advantage. Internal staff to manage investments..we do not do that yet. Folks manage some cash invs and overlay manager. They save money because they manage at lower costs, further down the road, addressed in study, For any specific manager, bringing on any staff does not result in direct reduction of fees, saved 400,000 annually in fees competitive marketplace, more competitive, hedge funds have higher fees that are coming under pressure also, hoping to gain better risk adjusted perfomrance than we currently get, that performance will inc. 30:53 ~ 12/6/2011 8:46:02 AM ~ Nicholas: pg 6 Numbers to draw attention to ..our group is unusual, paying attention to? 31:18 ~ 12/6/2011 8:46:27 AM ~ Williams: The ration of actives to retirees suggest a relatively mature program in respect of monie in vs money out, shifting to disbursements, contribution levels est. think they are appropriate, assuming meet 8% hurdle established, will review to determine appropriateness. The public employee plan is a mature system. When it is young, you have an asset cushion. 32:37 ~ 12/6/2011 8:47:46 AM ~ Nicholas: Look at actives, retirees, contributions, when employees take benefits, huge component of rate of return, 8% hurdle, assumption table provided, % funded, low 80"s 33:21 ~ 12/6/2011 8:48:29 AM ~ williams 84.6% 33:27 ~ 12/6/2011 8:48:36 AM ~ Nicholas: funding based on premise of achieving 8% return on corpus, won't hit 8% every year, pick it up other years? 33:56 ~ 12/6/2011 8:49:05 AM ~ Williams: Yes, that is correct. Over 25 yrs have hit it, Since 2008, down 30% up then up again, Different investment retirement than in the past. does not mean 8% is not achievable, going to look at long term asset, determine if we can achieve that. Half of unds use an *% return, some have gone to 7 1/2 or 7 and 1/4 which has a significant impact on liabilities of program. 35:32 ~ 12/6/2011 8:50:40 AM ~ Nicholas: Challange: want to be conservitive, if you change hurdle rate, does it change funding rate and by how much 36:17 ~ 12/6/2011 8:51:25 AM ~ Williams: Signifigant impact, % points, not basis points, moving towards the 80%. Our actual funded ration will increase over time if achieve hurdle rate. Smoothing: acturaryla method, still factoring in losses of 2008 of 30% should be smoothed out over next 2 yrs....affects negatively the funding rate. 37:54 ~ 12/6/2011 8:53:02 AM ~ Nicholas: Defending the defined benefit plan...If we have a generational problem should correct it, as we go into session, look at 8% rate as it is an aggressive number, being way too optimistic, bigger problem, some say way too conservative , should allow colas, do not take away benfits, there are structural issues and issues with plan. if you adjust the rate, how does it impact the funding number, educate us so we can speak informed to both sides of the aisle, we are in the middle, provide us some information in a way to use it correctly 40:31 ~ 12/6/2011 8:55:40 AM ~ Williams: CAn bring impacts in assumed rate of return changes on the funding rate. Defined benefits vs. defined contributions. lower rate of return negatively affects funding rate, other factors impact..are contributions adequate to meet assumed liabilities of plasn . insufficient then it is structural issue. are we funding properly? current contribution level correct. 42:06 ~ 12/6/2011 8:57:14 AM ~ Nicholas: Tell us as we go through tables what structural issues are for plans and what need to do. 42:52 ~ 12/6/2011 8:58:01 AM ~ Pedersen: Good thing we could use. The report to JAV in interim section D on acturaila cost study. Benefit multiplier is adjusted as go through the studies. Studies 6, 7, 8.... Nintth study at 7.5 and 10 th if have 7.5 what would happen if dropped multiplier.. Would extend to 2040. Tab D Requested Acturial Cost Study on page 3. Tables show the different pieces how benefit multiplier could be adjusted. How asset return is not so 7.5% would help with questions. 46:31 ~ 12/6/2011 9:01:39 AM ~ Williams: Woould help with different rate of return. Structural issues could be addressed. Doesn't believe have a problem for defined benefit paln. Board has made some recommendations for the plan in document referenced by Rep. Pedersen. Talked of factors retirement age, level of contrihution.... Would be happy to proved the number and to extent identify shortfalls. 48:17 ~ 12/6/2011 9:03:25 AM ~ Nicholas: The problem have problem. People in plan have problem with seeing no opportunity for COLAs. Discussions have to go back to the math -- if program can't sustain. Part of what to teach us what is the math and how do we know math that plan can be sustained and that we can have COLAs. 49:45 ~ 12/6/2011 9:04:54 AM ~ Williams: I appreciate observations. There is great disappointment and they are aware of long term retirees lack of COLAs. COLAs were not originially part. Early on there were no plans with COLA. In late 70s programs began COLAs. Sustainability of main plan and that of providing COLAs should be separate. Pursue COLA funding through other vechicles 52:04 ~ 12/6/2011 9:07:13 AM ~ Nicholas: Chart of typical employeed e.g.g, 5 year employee, showing whati benefit would receive out. Expect that rmployee would receive more than paid out. Could produce a chart? 52:56 ~ 12/6/2011 9:08:05 AM ~ Williams: Would have to discuss with actuarial consultant. Does agree that pay out is greater than pay in. 53:26 ~ 12/6/2011 9:08:35 AM ~ Nicholas: Design to provide benefit or income. If would provide table showing for every 5 years since salaries change so much over time. May reflect already given. For retiree today with no COLA how would it look. Need a demonstrative aid to show to people. 54:53 ~ 12/6/2011 9:10:01 AM ~ Willaims: Can provide document. Purchasing Power retention study that shows negative impact.. Study showed 40% reduction in purchasing power. 55:37 ~ 12/6/2011 9:10:46 AM ~ Nicholas: If what develop doesn't show anything 56:08 ~ 12/6/2011 9:11:17 AM ~ Meyer: Touched on area more on the perrogative of the Board than the director. Last two years with Tom Williams and active investment committee. As matter have discussed defined contribution and defined benefit. What are thr rocky points that need to be changed. Prior bills didn't have good deal. You have recommendations that hit those points making the system back .... You have two reports by LSO audit and Management Council did. It told you things that need to need to be done. We are trying to build an investment system in the top quartile that avoids more contributions. You have to separate COLA from the rest. If you want to put in COLA you need to say. He is not going to take a position on COLAs. Most have gotten introuble because of COLA and medical insurance. If you are over 80% you are in good shape. Right now you have 30 year payh out. We are not in trouble. Best recommendation is to help build investment group. Anyone said seen defined contribution will overwhelm retaining defined benefit system. He is trying to describe the system as presently is to cut back the benefits. Give a first class investment system. If you remember 2nd audit you will find thaat internal checking .. . 1:02:43 ~ 12/6/2011 9:17:52 AM ~ Nicholas: One of things we can look. Not concerned about the direction today. Folks are scared and we are able to make decisions now. We are making 100 year decisions. It will be a gerneration plan. Worried about the stock market and nothing is changed about structure. Plans that change multipliers and COLAs when at 100% vs a vs 74%. What we are doing is setting in terms and understandings and setting aside parameter so when things are tough. Capturing the historical information so colleagues we can say no. If we are going to to this need rules set out. If 20 year and making investment decisions need to know. Need to take prssure off the system for retirement to be replacement of income. They need to have other investments. It takes good planning and people need to be educated. If we can't get understanding. You take your money and ivnestment. Purpose of exercise is that we cast into stonde the lessons we have learned so can 1:07:15 ~ 12/6/2011 9:22:23 AM ~ Williams. Strongly appreciate the comments. Expect pressures as yet undetermined to increase benefits going forward. Formalize what have learned and through the Board have established a base plan. What is the longer term trend toward investment. Should fund COLA beyond 100%. Theis will inform perspective beyond present to future boards. The reality is the plan will be around for 60-80 years for present employeeds. He can't speculate to future Board or JAC. 1:09:32 ~ 12/6/2011 9:24:41 AM ~ Nicholas: Generate additional spending over last years. What maount is directly allocated to salary increase and increased contirubtions to retirment plan. Expects about $40 M. There is $80M that is just contributions that we are paying. On top of this with salary increases. Expect over $100 M directed to retirement. 1:11:11 ~ 12/6/2011 9:26:19 AM ~ Willaims: Comment is $40M is total of employer and employee spit 50:5). 1:11:38 ~ 12/6/2011 9:26:46 AM ~ Summers: Total of this with resepect to state fund. Only 1/3 coming from state. Comes from local employers. 1:12:22 ~ 12/6/2011 9:27:30 AM ~ Nicholas: Appreciates that. He would still want to have a handle (budget allocation). 1:12:48 ~ 12/6/2011 9:27:57 AM ~ Berger: Take a 10 minute break. 1:12:59 ~ 12/6/2011 9:28:08 AM ~ 1:27:49 ~ 12/6/2011 9:42:57 AM ~ Berger: Lets proceed ahead to Page 7 1:38:04 ~ 12/6/2011 9:53:13 AM ~ Williams: Page 6 this is the demographics of our plan. THe employee plan is a mature plan of 304 retirees. The volunteer EMT program is a good example who do not have any retires at this point Page 7 It shows the nine programs. Out of this 14.1% contrubutrion plan, we pay Admin. cost is .31. This is low compared to most retirement plans. The funding ratio is 85%. Page 8 1:41:29 ~ 12/6/2011 9:56:37 AM ~ Nicholas What does it mean onPaid Fire A. Is there money going to be in the plan when the last employee takes money out?d 1:42:22 ~ 12/6/2011 9:57:30 AM ~ Williams: When the last man or woman takes out the last money, it will be broke before then. 1:43:19 ~ 12/6/2011 9:58:27 AM ~ Nicholas Is it 4Mill a year or something else. We don't want to put money in a plan that will never get paid out. If you put money in the plan, you can't get it out later on if not needed. 1:44:47 ~ 12/6/2011 9:59:56 AM ~ Williams: If we want to incremently fund that program, this sheet shows that amount. If we wanted to do it this year it would be 4.275 Mill. 1:45:48 ~ 12/6/2011 10:00:56 AM ~ Nicholas: When the last check is sent.... 1:46:14 ~ 12/6/2011 10:01:22 AM ~ Williams: 1:46:21 ~ 12/6/2011 10:01:30 AM ~ Von Flatern: This 4.2 mill is that the amount we are short this year or all years. 1:46:55 ~ 12/6/2011 10:02:04 AM ~ Williams: That is for 2010 and future years Page 13 1:47:55 ~ 12/6/2011 10:03:04 AM ~ Nicholas: Just as an idea. Either we can keep our hands off, maybe we should establish a reserve account 1:48:54 ~ 12/6/2011 10:04:03 AM ~ Williams: The boards direction is not a hands off. Maybe istead of putting in the State O Page 14 Investments for the last 3 years. OCIO we have no objection to that reduction Page 15 & 16 What we see here is a request for our investment staff. We all understand that money is paid to investment staff. The McLanan Study shows the compensation study for contract positions. What we have now is what now represents the investment team. The 4th position is for risk management purposes. Unless one is monitoring on a daily basis, risks...... We need to understand how much is invested in a particular stock, contry, type of stocks, etc......... If you don't see it, you cant' control it. 1:55:20 ~ 12/6/2011 10:10:28 AM ~ Nicholas I guess for a long time have thought about it. 6 billion investment, 4+ under the mineral trust fund. Everything we are talking about here, I share the same concern. If we say the saleries are right on Should we consider an investment management group. Put them in position to give information. 1:58:15 ~ 12/6/2011 10:13:24 AM ~ Treasure Secetary: The state system is doing quite well. I'm not sure we need any help. We have two years with an investment manager 2:00:20 ~ 12/6/2011 10:15:28 AM ~ Williams: We do share considerable information at this point. Waldren attends our meetings. 2:01:01 ~ 12/6/2011 10:16:10 AM ~ Pedersen: I would like to use an example of why we need to use these services. When a board does not meet every day is not the best way to go. The purpose of that individual to to find good funding funds. What we did one time its called a Sharp Ratio For every point risk you take on, what is the excess return. He recieved almost 2% additional for every point of risk he increased. You could get a subscription of Mobees (?) and a couple of lesser paid consultants and achieve the same thing. 2:05:28 ~ 12/6/2011 10:20:36 AM ~ Meyer: Quite frankly is to do no harm. Yes we lost $300,000 but...... Let's not and I'm not mad. 2:06:42 ~ 12/6/2011 10:21:50 AM ~ Williams: Page 16 The gov is supporting our request but is being offset by the 100 serries but does not include that 4th position. There are 3 other roles within the agencey that we are trying to strengthen. We have a program that we intend to expand..... Require an education of the program, also IRA's , SS, etc. We thought this education could increase participation in the plan. The gov. in summerary supported the three positions, but not the forth 2:10:31 ~ 12/6/2011 10:25:40 AM ~ Nigholas: Put them in AWACS 2:10:52 ~ 12/6/2011 10:26:01 AM ~ Williams We are required to pay to get that caliber of expertise. Yes they will be At Will employees. 2:11:48 ~ 12/6/2011 10:26:57 AM ~ Nicholas: Typically don't you want them in the plan, so that they 2:12:24 ~ 12/6/2011 10:27:33 AM ~ Meier: You only ask for one, but I think you need two. Would like to see pay for performanc raises. I think this is one area that could be easily defined 2:14:10 ~ 12/6/2011 10:29:19 AM ~ Williams: Yes , I think at some time a pay for performance should be considered. I'm not sure statures would allow it. 2:15:22 ~ 12/6/2011 10:30:30 AM ~ White: I wanted I think that is something over the long term that should be considered. I think that is an important element. 2:16:54 ~ 12/6/2011 10:32:02 AM ~ Harshman 2:16:59 ~ 12/6/2011 10:32:07 AM ~ Harshman I don't see any difference I could see where some massive 2:17:48 ~ 12/6/2011 10:32:56 AM ~ Williams: Generally, those bonus's are not paid. If they are paid is because of performance that was exceeded. Long term stratagies pay better. They are performing better than their benchmarks. It's one of the reasons 2:19:58 ~ 12/6/2011 10:35:06 AM ~ Nicholas: if we were in markup today, I would recommend that they would be at-will employees, Pay for performance and call it investment staff. For all practical purposes they would be State employees, highly paid Meet with Bosewell, how it would be built, terms of employment. A recognition that they will get paid more. 2:22:40 ~ 12/6/2011 10:37:49 AM ~ Williams: We can put broad language in it but no details at this time.. Priortity #5 Rental Space We have outgrown that space 3 or 4 years ago. They confirmed we don't have enough space. At some point, we have no room to grow. We put an RFP out for landlord to respond. The space we would like to move is in our existing building. We would go from 12,000 s.f. to 18,000 s.f. Priority #6 This results with discusions with our existing contractors. This is based on cost extimates from our consultants. After 20?? will require more information about aucuaries. Under the new government requriement boards, there is more work for the acuaries. It also reflects the additional expense ........In the context of the audit, the cost of the audit will also increase. Page 22 We are trying to anticipate annual costs. Such a change orders in the developement of the program. There $400,000 conversion to micro film & fish. THe equipment to read this media is not available. Convert as quickly as possible. 2:32:23 ~ 12/6/2011 10:47:32 AM ~ Nicholas When is the last time we discussed micorfilm to have A&I cultural resources to coordinate I need those people to give us some feedback. The is portrayed a little bit differently 2:34:22 ~ 12/6/2011 10:49:30 AM ~ Berger What we should ask them to do is to 2:34:54 ~ 12/6/2011 10:50:02 AM ~ Williams We have paper copies filed with the State Archieves. Anyone who needs that information would 2:35:49 ~ 12/6/2011 10:50:57 AM ~ Pederson:: 2:36:16 ~ 12/6/2011 10:51:25 AM ~ Berger: More information may be available on stability of microform and digital. 2:36:42 ~ 12/6/2011 10:51:51 AM ~ Nicholas: Information different from what previously received about need for microform hardcopies. Have we be given a song and dance? Need to get driector Boswell involved. Received different information about microform and digitial. 2:38:16 ~ 12/6/2011 10:53:25 AM ~ Berger: New director is Michael Storm. 2:38:33 ~ 12/6/2011 10:53:42 AM ~ Williams: Pag. request for applications programmer. There is need for role OCIO supports. If approved would need early monies. Professional advice position needs to be in place as going forth with development of programming. Asked as a contract position. The reasons are do not know if the position will be in Retirement System or OCIO. The difference for magnitude of request from request to OCIO is that the contractor for system recommendation of costs for 1 1/2 positions. the single individual number is dffferent from governor's eecommendation. Page 23 shows RAIN programmer costs. 2:42:20 ~ 12/6/2011 10:57:29 AM ~ Nicholas 2:42:24 ~ 12/6/2011 10:57:32 AM ~ Williams: Recommendation is for one time. 2:42:35 ~ 12/6/2011 10:57:43 AM ~ 2:42:39 ~ 12/6/2011 10:57:48 AM ~ Beger: Agreement from Jones and Waters 2:42:51 ~ 12/6/2011 10:57:59 AM ~ Williams: Request for computer Telephony integration 2:43:05 ~ 12/6/2011 10:58:14 AM ~ Nicholas: Lets go back. Gov. recommentation on page 25 for one-time Data Cleansing Change Orders. 2:43:49 ~ 12/6/2011 10:58:57 AM ~ Jones: There is a corresponding recommendation that rounds out later in the budget. Portion for pension component and ... 2:44:28 ~ 12/6/2011 10:59:36 AM ~ 2:44:34 ~ 12/6/2011 10:59:43 AM ~ Wales: Page. 25 indicates the split recommended . 2:45:10 ~ 12/6/2011 11:00:18 AM ~ Nicholas: What did Governor approve? 2:45:24 ~ 12/6/2011 11:00:32 AM ~ Williams: Microform conversion. The scopi changes was denied. $200K would be porition of costs for conversion. Nicholas: Wants to know what the costs approved. 2:46:43 ~ 12/6/2011 11:01:51 AM ~ Jones: Amounted of $200K related to approval of some of microform work in the request. 2:47:39 ~ 12/6/2011 11:02:48 AM ~ Nicholas: What was the basis of approval of $200K split between two agencies? What is it for? Is it part of larger project. 2:48:18 ~ 12/6/2011 11:03:27 AM ~ Jones: Wants to consult with OCIO. 2:48:31 ~ 12/6/2011 11:03:40 AM ~ Nicholas: It is not good enough to say approval for $154 and pick up rest elsewhere? What I am getting for $200K. We spend a lot of time if don't have an explanation for the decision. 2:49:32 ~ 12/6/2011 11:04:41 AM ~ Williams: My expectation is to use for microform digital conversion. Based upon estimate it would allow to convert porition. 2:50:01 ~ 12/6/2011 11:05:10 AM ~ Nicholas: Is it helpful. 2:50:10 ~ 12/6/2011 11:05:18 AM ~ Williams: It would benefit the task. But would prefer to have the entirety. 2:50:32 ~ 12/6/2011 11:05:41 AM ~ Nicholas: Is it project staged overtime? What is the plan and what tryiing to accomplish. 2:51:06 ~ 12/6/2011 11:06:14 AM ~ Willaims: Want to do project in one fell swoop. The estimate is $400K. As result of equipment breaking down. Emergecy request for estimate was $270K but could be more. Present equipment is unreliable. Want a complete solution. 2:52:04 ~ 12/6/2011 11:07:13 AM ~ Edmonds: Where in tne work for prio approved money. 2:52:37 ~ 12/6/2011 11:07:45 AM ~ Williams:; Have two vendor , but have not expended all of funds yet. Well underway in project plan. They are expecting the system in entirety in 2013. 2:53:31 ~ 12/6/2011 11:08:40 AM ~ Nicholas: Was there a discussion with Governors office about the $156. 2:54:02 ~ 12/6/2011 11:09:10 AM ~ Williams: He doesn't believe they had that conversation. 2:54:14 ~ 12/6/2011 11:09:23 AM ~ Nicholas: His expectation is for a disucssion to taken place if less money approved. If it a dart on wall he is okay. If there is a rationale he wants to know. We need to have A&I each time. We can't get back 2:55:38 ~ 12/6/2011 11:10:47 AM ~ Berger: Mr. Waters to comment 2:55:46 ~ 12/6/2011 11:10:55 AM ~ Waters: If quote received, recommended it can be complete for $200K. 2:56:33 ~ 12/6/2011 11:11:41 AM ~ Nicholas: If all the agencies need to be contacted or else sit in each meeting to tell us what it is. If you can do for less. 2:57:18 ~ 12/6/2011 11:12:27 AM ~ Waters: Just the $400 for original request. 2:57:38 ~ 12/6/2011 11:12:47 AM ~ Nicholas: Let' get more coordination. In years to come that which is described should appear in the narrative. $200K will get it. 2:58:14 ~ 12/6/2011 11:13:23 AM ~ Berger: Follow-ip on microform and digital archiving white paper 2:58:35 ~ 12/6/2011 11:13:43 AM ~ Williams: Page. 25 Priority 4 on computer telephony integration. Goal is to link computer and phone system so could access information on any caller to system. Most retirement systems provide this linkage so can see specific information on caller. This was not originally requested. So developed a separate business case. The contractor advised that would be advantage in doing simultaneouls. 3:00:29 ~ 12/6/2011 11:15:38 AM ~ Williams Volunteer Fire and Game and Fish. 3:00:47 ~ 12/6/2011 11:15:56 AM ~ Wales: Page 29 there is request for highway patrol. This was previously requested. Governor rep decreased the request due to decease of retireees of Highway Patrol retirement Plan. The same request from Game and Fish recommends reduction in amount. 3:02:38 ~ 12/6/2011 11:17:47 AM ~ Wales: On page 38 made recommendation for funding of Volunter EMT. We received for actuary. So asked for net amount to fully fund system. Governor did not recommend. If f did have request would full fund for 2012 for 373 in plan. The amount is $906, 231. This does not have a future funding source and would have to request. 3:04:55 ~ 12/6/2011 11:20:03 AM ~ Nicholas: Is it plan with defined benefit. 3:05:08 ~ 12/6/2011 11:20:17 AM ~ Wales: It is plan based upon table of benefits. AT age 60 would become eligible. 3:05:46 ~ 12/6/2011 11:20:54 AM ~ Nicholas: Open plan 3:05:52 ~ 12/6/2011 11:21:00 AM ~ Wales: It isan open paln. 3:06:02 ~ 12/6/2011 11:21:11 AM ~ Steward: I appreciate the discussion. EMT pension fund set up as an incentive for the valuable service to the state. When set up, it was an ongoing retirement systems with one time funding. To close the gap becuase of ;low contributions of members. He sees it as a good one time expense. 3:07:52 ~ 12/6/2011 11:23:01 AM ~ Nicholas: Every year. 3:08:02 ~ 12/6/2011 11:23:11 AM ~ Steward: It is his understanding it would support for present members. 3:08:25 ~ 12/6/2011 11:23:34 AM ~ Wales: It is correct. 3:08:33 ~ 12/6/2011 11:23:42 AM ~ Nicholas: The $906K would support every one? 3:08:50 ~ 12/6/2011 11:23:58 AM ~ Wales: It woudl support present members. As it grow it would require ongoing funding. 3:09:14 ~ 12/6/2011 11:24:23 AM ~ Pedersen: Is this onetime funding based upon parameters for set parameters use the 8%. 3:09:52 ~ 12/6/2011 11:25:01 AM ~ Harshmean: Based on original appropriation 3:10:52 ~ 12/6/2011 11:26:00 AM ~ Wales: The amount of $906K takes into account the side account to fully fund. 3:11:19 ~ 12/6/2011 11:26:28 AM ~ Nicholas: Just for the $900K . 3:11:38 ~ 12/6/2011 11:26:47 AM ~ Harsman: Just the amount because of buy in 3:11:56 ~ 12/6/2011 11:27:04 AM ~ Wales: Originally anticipated upward of 2000 members. There is confusion among potential members about a benefit for life. 3:12:46 ~ 12/6/2011 11:27:55 AM ~ Nicholas: How does the system work 3:12:55 ~ 12/6/2011 11:28:04 AM ~ Wales: He doesn't have statutes inf front of him. Member has to be a license EMT. When recieve a request verify license. They do this every two year. The members pay into plan $12>50/month. 3:14:01 ~ 12/6/2011 11:29:10 AM ~ Nicholase: how long to pay 3:14:08 ~ 12/6/2011 11:29:17 AM ~ Wales: As long as he is member. Would have to pay each year for 30 years to age 60 3:15:02 ~ 12/6/2011 11:30:11 AM ~ Nicholas: What do we get for it? What does the EMT have to do get $10,500. 3:15:28 ~ 12/6/2011 11:30:37 AM ~ 3:15:33 ~ 12/6/2011 11:30:42 AM ~ Steward: License and retain an A Card. They have to be on call and providing service to the community. 3:16:02 ~ 12/6/2011 11:31:10 AM ~ Nicholase: Year-round 3:16:10 ~ 12/6/2011 11:31:19 AM ~ Steward: Can't answer. It is a year round responsibility. It is high bar to maintain an A card. 3:16:39 ~ 12/6/2011 11:31:48 AM ~ Nicholas: Lawyer has bar license and pro bono services. Now paying upfront could get benefit. 3:17:24 ~ 12/6/2011 11:32:33 AM ~ Steward: 5 years to be fully vested. Some information escpages him. The on call service exceeded 40 hours a week. This is limited by number of actual calls. Service far in excess of normal week. 3:18:33 ~ 12/6/2011 11:33:41 AM ~ Nicholas: If we want to do it should pay for it as we go. He is not certain from taxpayers. What is value paid and received? We should pay as you go. 3:19:40 ~ 12/6/2011 11:34:49 AM ~ Wales:;; Have to contribute the entiriety of career.\ 3:20:17 ~ 12/6/2011 11:35:26 AM ~ Nicholas: Are they going to work their career or not. 3:20:41 ~ 12/6/2011 11:35:49 AM ~ Steward:; Should pay as you go. It was one time funding. We've been successfully grazing off the remants of that funds. The program is funded acturarily. The funding ration will go to zero. The intent of request is not to kick the issue down the road. Do you have a time when the money depletes. 3:22:39 ~ 12/6/2011 11:37:47 AM ~ Wales: It is a guess based upon the market. We have been drawing down $150K per year. His guess is three more years. 3:23:12 ~ 12/6/2011 11:38:20 AM ~ Berger: Then what happens 3:23:21 ~ 12/6/2011 11:38:30 AM ~ Steward: The program is not funded. 3:23:32 ~ 12/6/2011 11:38:40 AM ~ Pedersen: No guarantee, statue for any of the retirement plans we have created 3:24:17 ~ 12/6/2011 11:39:26 AM ~ Nicholas: If money is going down, drawing down? 3:24:35 ~ 12/6/2011 11:39:44 AM ~ WElls: 2013 before we have the first retiree drawing. requesting that current 173 volunteers remain in plan, to pay benefits 30 or 40 yrs down the raod 3:25:22 ~ 12/6/2011 11:40:31 AM ~ Nicholas: When we set up paln, did we know the cost? 3:25:34 ~ 12/6/2011 11:40:43 AM ~ Wales: Contribution for employee is 12.50. There was no discussion for a funding source at the time. 3:26:00 ~ 12/6/2011 11:41:08 AM ~ Nicholas: Was there a beenfit they were supposed to get at the end of the day? If so an actuaria said what it would take to get there. 3:26:24 ~ 12/6/2011 11:41:33 AM ~ Wales: When created, 900 + dollars went into state auditors office. I dont know if any ..outside of the actuarial study helped formulate this plan. Indicated we would have to look for af unding source, similar to firefighters boards...gets 50% of ... 3:27:22 ~ 12/6/2011 11:42:31 AM ~ Nicholas: Drawdown, no retirees, receiving 12.50 per month. You are drawing down so where is it going. Why, how much and wher do you put it? 3:27:58 ~ 12/6/2011 11:43:06 AM ~ Steward: Labor, health committee bill brought this forward..year long study to look at how the pension fund would work, joint effort from Dept of Health as well as an actuarial study, always knew there would be a need for more than 12.50 per month to fund this. Approval for funding from GF. At the time there was enough funds. At last minute, an amendment was put on the bill to make it one time funding. Have been grazing off of it because of low enrollment. Low enrollment because we have not captured a lot of the EMT's because they were in the firefighters pension plan. Provision in bill against double dipping. Low enrollment has allowed us to graze off the initial funding..always known, can provide the initial study, always known there was a gap in funding. 3:30:35 ~ 12/6/2011 11:45:44 AM ~ Nicholas: One thing to say we will match premium. We weould not have funded anything unless we match the 12.50 and get so much. have defined a premium that the contributions can not pay so it is not actuarial sound and is against the constitution. 3:31:28 ~ 12/6/2011 11:46:37 AM ~ Harshman: Where is the drawdown going? 3:31:42 ~ 12/6/2011 11:46:51 AM ~ Wales: BAsed upon the actuarial valuations that Gabrial Roter does, provide us with required annual contribution, in my terms additional amount to keep the contribution coming in to the plans...that has been about 150 to 180,000 per year to supplement. The 906 thousand is to pay the future benefits in the future 3:32:47 ~ 12/6/2011 11:47:55 AM ~ Nicholas: If we start a plan, say must pay this amount. Saying we did plan with a benefit without knowledge of cost to us? 3:33:20 ~ 12/6/2011 11:48:29 AM ~ Williams: believe there was a cost developed. The monies set aside were insufficient for the long term costs. The 150 to 180,000 is to fund the benefits being accrued yearly. We get the money from the state auditors office, invest it at 7 1/2 %..WE know the monies will run out in 3 years 3:34:30 ~ 12/6/2011 11:49:39 AM ~ Nicholas: Go back and collect the original information...what we were sold on and funding. Measure it against where we are now, were the assumptions correct and we did not know what we were buying or were the assumptiosn wrong. May have to close the system until... Statue says get this benefit later and only paying this amount, state will pick up the void. I would like to know what the void it, what is expected to return, how long will it return. Collect original information. Find out if we close the system until we figure it out. What have we gotten ourselves into? 3:36:08 ~ 12/6/2011 11:51:17 AM ~ Steward: Session laws 2007 section 3 initial funding ...only expenditured for funding the difference....actuarial ...funding..contribution required." This validates that this was a known gagp. 3:37:00 ~ 12/6/2011 11:52:08 AM ~ Nicholas: a monthly premium to get your benefit, all we pay is for difference in premium, when the money runs out, the monthly premium paid will not pay for the benefit...figure the monthly premium, can draw to pay the premium. Now they are saying the premium was never enough to deliver the premium, 3:38:05 ~ 12/6/2011 11:53:13 AM ~ Harshman: Is this set up to similar ratios of volunteer firefighters. For every 5 per month, we contribute 80 per month. First questions: similar to firefighters plan? 3:38:42 ~ 12/6/2011 11:53:51 AM ~ Wales: Yes, contributions to both plans are 12.50 per month. The beneifts are based on a table based on age, .. 3:39:11 ~ 12/6/2011 11:54:19 AM ~ Harshamn,: Firefighters have the fire fighter tax to fund it but this does not. 3:39:29 ~ 12/6/2011 11:54:37 AM ~ Wales: That is correct: 3:39:35 ~ 12/6/2011 11:54:43 AM ~ Nicholas: Listen to the explanation. You set up a monthly premium, missing premium paid out of the 900,000 and take amt to complet the premium. Are you telling us now that the premium now is not sufficient... 3:40:27 ~ 12/6/2011 11:55:36 AM ~ Wales: The 900000 has a finite life. We draw down what the required contribution is annuyally. The auditors office will not allow us to draw down any amount that is not in the actuarial. Not sure how that amount was set up. Set in statutes. 3:41:19 ~ 12/6/2011 11:56:28 AM ~ Pedersen: Looked at plan over the interim, there is not income because they are volunteers. Plan must be collapsed ....Dave Gruber. worked on it. Collapse the plan, return the money contributed plus attributable interest, the remainder defaults back. or benefit reduction..did not pursue either, 3:42:32 ~ 12/6/2011 11:57:41 AM ~ Meier: We knew going in that the 900,000 was not sufficient to fund the plan. It was a best guess at the time, based on number of people coming in. There is always the thought that at some point in time, money would have to be added to this plan or a funding source developed. not time in that session to do that. Joint labor felt incentive needed because in rural areas emt's are needed, a lot of people without emt's. Reason for it is a medical reason, not a retirement reason. Now it is time to pay the piper or revisit aif reasons still exist. This is one way t fund it up front..may be other areas to explore to fund it...some kind of tax. something that does not have to happen at this time as a few years left...important for the retirement system to bring forward to s we have time to lok at it...is it still a priority to provide emts in rural area. Question: Do we want to keep this incentive program, pay it up, or stop it. I would like to know a better idea about the 173 number. Can it grow? What is the tradeoff between the firefighter double dip? Is the incentive the proper way to go if we stil need this incentive? Have options and time to work on it.. glad it is brought forward. Best guess at the time. 3:47:12 ~ 12/6/2011 12:02:21 PM ~ Nicholas: find those things out. Can't tell from description..monthly benefit, monthly contribution, draw from reserve for difference. Is 906000 the pot to draw from to pay the matching or if we match premiums, are we never sufficient to provide the benfits? As long as you work, we will pay the difference. Now, it sounds lik..whatever the monthly benefit is, there is not enough to meet it...continue to fund gap, will that deliver the benefit? Is there a shortfall needed to pay the premium for the working life of the EMT or is it that you needed a higher premium. 3:49:31 ~ 12/6/2011 12:04:39 PM ~ Williams: My sense, normal cost 169,000 offset by amount paid by member. need something of that range every year for the life of the program for the existing members. If we went to prefund it, then need the 900,000. The 163 is a fraction of the number who could participate but the question is if we close the fund or keep it? If we freeze this program right now, it seems we need 906,000 right now as well as the money in poclet to fund those benefits. 3:51:22 ~ 12/6/2011 12:06:30 PM ~ Nicholas: To be constitutional, must be services and then benefit. If you stop offereing the services, then you stop and your benefits are determined. If you are saying you only have to work one year and then can continue to put in and receive the benefits, this can not be down constitutionally. Can only pay people for services delivered, otherwise founders knew all kinds of people would want retirement..funding. What is it? Are we paying 2 to 1 or 6 to 1. If we stop the plan today, not doing it by indiviudal, doing it by group. 3:53:30 ~ 12/6/2011 12:08:39 PM ~ Williams: Past plan year, normal cost was ...employees contributed ...ratio 169 to 126. There is a small administrative cost. The constitutional issue is a legitimate one. There are administrative issues..do not have folks monitoring hours, difficulty getting volunteers to deduct the money, some send it in on their own, some via their sponsor, the administrative infrastructure is not in place to monitor when they are on duty. Place on call...system trying to compensate them for availablility without defining the degree of it. 3:55:49 ~ 12/6/2011 12:10:57 PM ~ Chairman Berger: Mr. Wales, next issue 3:56:02 ~ 12/6/2011 12:11:11 PM ~ Pg 41 Deferred compensation, Exceptions ..% Tom has already discussed. Tom has covered those. 3:56:48 ~ 12/6/2011 12:11:56 PM ~ Berger: move to page 45 denial on the computer phone system 3:57:09 ~ 12/6/2011 12:12:17 PM ~ Williams: relates to computer telephony...OCIO recommendation is to defer that and pursue when pension system completed 3:57:40 ~ 12/6/2011 12:12:48 PM ~ Berger: Rental space with item 2, 3:57:49 ~ 12/6/2011 12:12:58 PM ~ Williams, takes care of budget 3:57:55 ~ 12/6/2011 12:13:04 PM ~ Edmonds: Going back two months ago..shortfall in plan...get a list of how many times the state has paid a shortfall in any of the plans and what mechanism were used to pay it. 3:58:37 ~ 12/6/2011 12:13:46 PM ~ Williams: I believe we can provide it. Recent was teacher pay raises that was unfunded, our records will reflect. 3:59:05 ~ 12/6/2011 12:14:14 PM ~ Pedersen: Include whatevery monies were increased over the last 10 yrs, that would include states portion of contribution increase, the 1 4 3 and the teachers shortfall. 3:59:45 ~ 12/6/2011 12:14:54 PM ~ Esquibel: Agencys asking for rent, new state office bldg. Will we see a lot of that? May we get a total amount of rent paid in this city. SEC requested a list of rentals. Mr Jones will get hat for us in Jan 4:00:44 ~ 12/6/2011 12:15:53 PM ~ Berger: Mr. Jones will get it for us, list has been requested 4:01:00 ~ 12/6/2011 12:16:08 PM ~ Esquibel: Wyoming is only 1 of 4 states that can pay retirement and has the top cushion per tax payer . 4:01:29 ~ 12/6/2011 12:16:38 PM ~ Berger: will you make a photocopy. Staff, how will we arrange the afternoon 4:01:44 ~ 12/6/2011 12:16:53 PM ~ Bill: Lets jump into the bills when we return and stick to the same schedule, 4:02:13 ~ 12/6/2011 12:17:22 PM ~ Berger: You will call the 3 agencies and defer their times 4:02:33 ~ 12/6/2011 12:17:41 PM ~