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HomeMy WebLinkAbout1993-01-14 FPB MINUTESFIREFIGHTERS PENSION BOARD MEETING January 14 , 1993 A regular meeting of the Englewood Firefighters Pension Board was called to order by Board member Bill Young at 3 :00 p.m. in the Training Room of the Englewood Police/Fire Complex, 3615 South Elati Street. Members Present : Members Absent: Others Present : A quorum was present. Approval ofMinutes Willis Resley, Council Appointee Mike Gruninger, Employee Representative Bill Young, Employee Representative Lorraine Hayes , Director of Financial Services Chris Olson , Chairperson (arrived 3 :30pm-departed 3:42pm) Clyde Wiggins , Mayor Carol Wescoat, Administrative Assistant II EFF A Members : Patrick McCoy, Richard Petau, Chuck Renner, Brian Bruns ***** MS . HA YES MOVED, AND MR. RESLEY SECONDED, TO APPROVE THE MINUTES OF THE REGULAR MEETING OF OCTOBER 27 , 1992 AND THE JOINT MEETING OF OCTOBER 27 , 1992 . Ayes : Young, Resley , Gruninger, Hayes , Nays : None The motion carried . * * * * * SEATING OF NEW MEMBER Mr. Young welcomed newly elected employee representative Mike Gruninger to the board , replacing Loren Ward. Mike Gruninger and Bill Young signed the Oath for the Firefighters Pension Board . * * * * * NEW BUSINESS Review of Minutes from November 12, 19 92 Meeting Minutes from the November 12 , 1992 informational meeting were distributed . Approval of minutes was not required . Consideration of Alternative Pay-out Options Ms. Hayes stated that pay-out options survey results were not published . The results were announced at the November 12 , 1992 meeting. Four surveys were received . Three indicated a preference to keep the benefits the same and one indicated that they would like one of the particular options . She also explained that because of the response at the November meeting she is looking for direction as to rather to pursue the issue of changing the pay-out options . Mr. Young stated his willingness to contact all membership to see what input they have related to the pay-out options . Discussion ensued relating to the effect on the plan's unfunded liability . Ms. Hayes stated it did not have an effect actuarially . The various distribution amounts are determined b y the actuary to be actuarially equivalent so there will be no effect on the current actuarial report and the unfunded liability . Ms . Hayes outlined the necessary steps to change the plan pay-out options . There would have to be an election resulting in 65% of active members voting to change the pay-out options . The plan would be changed officially ; the part that is in the City code would be changed by ordinance . The ordinance would have two readings and then it would go into effect 30 days after the final approval. An actuarial study is not necessary . Mr. Young felt that for members to make an informed vote, examples of the different options' dollar figures would be helpful. MS . HAYES MOVED , AND MR. GRUNINGER SECONDED, THAT STAFF REQUEST WILLIAM M . MERCER INC . TO PREP ARE EXAMPLES OF ACTUARIALLY EQUIVALENT PAY-OUTS BASED ON THE VARIO US OPTIONS DISCUSSED PREVIOUSLY. Ayes: Nays: Absent: The motion carried . Young, Resley, Gruninger, Hayes, None Olson 20% Supplemental Disability Benefit Ms. Hayes distributed and reviewed the written opinion of Rick DeWitt, City Attorney regarding the 20% supplement disability benefit. Mr. DeWitt's opinion is that the additional 20% disability benefit applies to each and every firefighter. He feels that the 20% benefit belongs in a separate fund. The final statement the opinion offers is that it is possible to terminate the additional 20% benefit since the Englewood Home Rule Charter Section 137 .5 indicates that benefits are lost if not negotiated and included in a collective bargaining agreement. The firefighters have not bargained for this benefit in the current collective bargaining agreement, consequently future fully disabled firefighters would not receive this benefit under the Agreement but they would receive it under the Code section . The City Council technically could change the Code and repeal the benefit. Mr. Gruninger indicated that the firefighters have negotiated for the benefit, because the current contract states that retirement benefits and contributions levels will continue as provided under the City plan and State statute. This included all benefits . The contract states that benefits will continue as provided under the City plan, which would be under Municipal Code and State statutes . Mr. Gruninger stated that even though this benefit was to be held separately he had not seen records to indicate that the funds were being held separately . Ms. Hayes presented several spreadsheets that provided a separate figure for this 20% benefit, but she explained that this figure was maintained only on a percentage of fund basis as an estimate only . The actuary had indicated to her that the benefit was included in their calculations but was not figured separately. The benefit was included with the City's contribution but not held separately . Ms. Hayes explained that there are only four individuals currently receiving the disability benefit. The amount payable to the four on disability is a known amount since they will receive benefits until they are either eligible for normal retirement or no longer considered fully disabled . Ms. Hayes stated that an advantage to creating a separate fund at this point is that new hires are also eligible for this benefit. It would be appropriate to separate it from the pension plan so that the pension plan did not pay for benefits for the new hires. Mr. Young questions whether part of the actuary studies had included both old and new hires . Ms . Hayes stated that they were based on the old hire firefighters only . This is one of the reasons Don Mazanec was hesitant to issue the 1992 actuarial report until it was determined if all firefighters were eligible for the benefit. The actuarial report would change if it were to include all firefighters and increase the unfunded liability of the plan . Should the 20% disability benefit be placed in a separate account, the unfunded liability would be decreased . Mr. Gruninger stated that if Mr. DeWitt's opinion is that the fund should separate and should include all firefighters , then t he City should fund it totally . Chris Olson arrived at 3 :30 p .m. Ms . Hayes purposed that the liability for the disability be taken out of the pension plan and put it into a separate fund to be funded on a pay-as-you-go basis . Bill Young left on call . A quorum was no longer present . Ms . Hayes explained an idea Chris Olson had proposed two years ago . Since the maximum amount payable to a disability recipient is known , that amount could be transferred from the pension fund into a separate fund . Any additional disability benefits from that point on could be funded by the City on a "pay-as-you-go" basis. This would reduce the liability of the pension fund , reduce the unfunded liability, and avoid the problem of adding new hires to the plan . Chris Olson left 3 :42 p .m . Ms. Hayes proposed having only one disability fund for both police and fire since both have the same benefit. Mr. Gruninger had no problem with one fund as long as , having seen the spreadsheets indicating an estimated break down of the contribution, he felt there was proof that the City had been making contributions for the disability benefits . Mr. Resley questioned the effect on the rate ofreturn for the fund if the moneys for the disability benefit were withdrawn . Ms. Hayes felt that the lost rate of return would be insignificant because of the small proportion of total fund assets being withdrawn . The board members directed that because they did not have a quorum for voting that further discussion on the pay-out options and the 20% disability benefit issues should be continued at a special meeting of t he board members . Ms . Hayes requested direction on possible affiliation with FPP A. After reviewing a few of the pros & cons of affiliating with FPPA as discussed at the November meeting . Mr. Gruninger stated that it was his understanding that because the new hire firefighters # ' belonged to FPP A that the old hire firefighters would also be eligible for the medical benefits at retirement that are offered by FPP A. He also stated that if they did affiliate with FPP A that it would still be the individual's choice as to whether to go with FPP A or stay with the old hire firefighters plan. One of his major concerns is guarantees . It is his understanding that FPP A will guarantee their pension and currently the pension is not guaranteed . Ms. Hayes stated that currently the pension is guaranteed because it is a defined benefit plan . At retirement you will receive the benefit the plan has provided . Mr. Gruninger said that according to State statutes the police pension is guaranteed , but the firefighters is not. If the plan goes broke, the membership is out of luck. Ms. Hayes explained that even if the membership is no longer making contributions, the City still has the obligation to fully fund it. Mr. Gruninger felt that ifFPPA will offer a guaranteed pension, he does not want to eliminate the possibility of affiliation if it would benefit even one person . Ms. Hayes will put the issue of FPPA affiliation on the next agenda to discuss with the full board . Meeting adjourned for lack of a quorum at 4 :06 p .m . '/ . u z/lt:cf uJ(.1~--ci~ Carol Wescoat Recording Secretary