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HomeMy WebLinkAbout1993-10-14 FPB MINUTESFIREFIGHTERS PENSION BOARD MEETING October 14, 1993 A regular meeting of the Englewood Firefighters Pension Board was called to order by Board Chairperson Chris Olson at 3 :00 p.m. in Conference Room B of the Englewood City Hall, 3400 South Elati Street. Members Present : Members Absent : Others Present: Chris Olson, Chairperson Willis Resley, Council Appointee Mike Gruninger, Employee Representative Bill Young, Employee Representative Clyde Wiggins, Mayor Frank Gryglewicz, Acting Director of Financial Services and Chief Accountant None Rick DeWitt, City Attorney John F . McNally, Esq ., McNally & Bowers P .C . Henry Seaks, Esq., Wells, Love & Scoby Richard Edison, Firefighter Don Mazanec, William M. Mercer, Inc. Carol Wescoat, Recording Secretary A quorum was present . * * * * * Approval ofMinutes MR. GRUNINGER MOVED TO APPROVE THE MINUTES OF THE REGULAR MEETING AND OF THE JOINT BOARD MEETING OF JULY 21, 1993. MAYOR WIGGINS SECONDED . Ayes : Nays: Absent : The motion carried . Olson , Young, Resley, Gruninger, Wiggins, Gryglewicz None None MR. GRUNINGER MOVED TO APPROVE THE MINUTES OF THE JOINT BOARD MEETING OF SEPTEMBER 13, 1993. MR. RESLEY SECONDED. Ayes : Nays: Absent: The motion carried . OLD BUSINESS Olson, Young, Resley, Gruninger, Wiggins, Gryglewicz None None J. David Wells Proof of Continued Disability Chairperson Olson reviewed J. David Wells' proof of continued disability to receive the 20% Supplemental Disability Benefit. No further action is required by the Board . Chairperson Olson reminded the Board that the supplemental benefit discontinues on Mr. Wells' 50th birthday which is April 2, 1994 . Review of Ordinances for Separate Funding of 20% Supplemental Disability Chairperson Olson reminded the Board of the April approval of the Ordinances to separate the funding of the 20% Supplemental Disability Benefit and the transfer of no more than $104,000 to the new Health Selflnsurance Fund from the Pension Fund to cover the benefit. John McNally introduced himself, provided the Board with his background, and reviewed his understanding of the issue . Mr. McNally stated there are two potential legal problems related to proposed ordinance change : The first issue, involves Colorado State Statutes Section 31-30-417 that allows local governments to establish an alternate benefit program for their firefighters . This statute allowed the City of Englewood to opt out of the mandatory State Benefit Fund for Firefighters set forth in C .R.S . Section 31-30, part 4 . A sixty-five ( 65) percent favorable vote of all participants is required to approve the alternate plan under C.R. S. Section 31-30-417. Also, amendments to the alternate plan must be approved by 65% of the affected participants. It is his understanding that the City feels its actions are not subject to C .R .S . 31-30-417, nor has it attempted to obtain the 65% approval by the affected firefighters . It is their position, from available information (the firefighter pension and benefit code sections) the benefit is all one plan, and the plan was created under C.R.S. Section 31-30-417 and therefore any changes require a sixty-five (65) percent approval. The second issue, involves the property right created under State Statutes in the Police and Fire Pension Plans . Mr. McNally referred to his letter of September 21, 1993, where he cited City of Aurora v . Ackman a recent case affirming this 2 position. In that case, the Court reaffirmed prior rulings that public employee pension programs constitute part of an employee's compensation under his contract of employment, and a governmental employer cannot unilaterally discontinue a benefit without providing a corollary benefit to replace it. They feel that transferring the disability benefit and the moneys to another fund covering all the City's employees could violate the Ackman ruling. Mr. McNally reiterated that the Board's actions could violate the voting requirements of C.R .S . Section 31-30-417, and the Ackman ruling . Mr. McNally reminded the Board they act a fiduciaries and trustees for the fund and are legally required to put the participants interests above all others . A conflict could exist between the City and the Board. State Statutes address this in C.R.S. Section 31-30-414. This statute requires independent counsel if a legal conflict exists between the Board and the City . Mr. McNally hoped that the Board would consider the new information he presented, and be informed of any misunderstanding. He suggested a meeting with City administration to resol ve the issue and find a common ground . Mr. DeWitt clarified that he is not able to remove any item from the Board's agenda. He felt Mr. McNally had not been clear in their prior discussion. Mr. DeWitt suggested that Mr. McNally's file was possibly not complete, and it may be appropriate if the attorneys compare files to ensure both counsels have complete information . Mr. DeWitt's understanding of Mr. McNally's position was he believed the City was affecting the disability pension. Mr. McNally affirmed, and Mr. DeWitt clarified they were not affecting the disability pension. Mr. DeWitt stated if the document was not clear, then the wording could be changed . The intent is not to alter the pension benefit. This is an accounting issue to separate the accounts and correct past practices . Mr. DeWitt invited Mr. McNally to meet with him at a time and date to be determined . Mr. Gruninger stated his concern is not whether they do the ordinance, but questions the need to transfer funds from the Firefighters Pension Fund. It was his understanding that when the Board voted to withdraw the funds from the plan it was to fund those individuals currently drawing the 20% Supplemental Disability Benefit. He suggested that the funds for the individuals currently receiving benefits be left in the pension fund and that the City fund all new recipients of the benefit through the Health Selflnsurance Fund . The only point he feels has been debated is why funds are to be taken out of the pension fund to start the new fund . 3 Mr. DeWitt stated that the funds were improperly placed in the pension plan fund according to the accountants. The wrong account received the funds. Mr. Gruninger said that was 20 years ago and that this fund has not received a dime from the City in over ten years. Chairperson Olson refuted Mr. Gruninger's statement by clarifying that the City's contribution to the fund includes the actuarially determined amount that goes for the 20% Supplemental Disability. Mr. Gruninger commented that the last actuarial report does not include those funds and the City does not want to fund it. Mr. DeWitt stated the City will continue to fund the 20% Supplemental Disability Benefit. The funding is not an issue, it is in the law . Mr. Gruninger has a problem with the City transferring $104,000 out of the Firefighters pension fund . H e was told in a board meeting , when the original request was over $150, 000, the m oney was to fund the four individuals receiving benefits at that time . The motion had been amen ded to $104,000 because Mr. Mazanec said that was approximately the amount it would take to actuarially fund the four recipient individuals . Mr. Gruninger r ep eated his request of not transferring funds for the current benefit recipients, and that the Cit y fund future rec ipients from the separate fund on a pay as you go basis. Mr. DeWitt explained that the funding of the 20% Supplemental Disability Benefit has been included in the pension fund. The ordinances only change where the benefit is accounted for. The money was improperly put into the pension fund and will be put it in another fund with funding continuing as required . Chairperson Olson referred to the April 8, 1993, meeting minutes when the Board had approved the transfer and the ordinances that define the change. He stated that the ordinances did not eliminate the benefit, but reinforces the benefit by specifically including it in the Code. The question of whether the benefit should be negotiated had been previously discussed . The benefit still can be a negotiated item, but it does not have to be because it will be in City Code. Nothing has essentially has changed; this is an administrative change only. Mr. McNally questioned the issue of approval of 65% of the firefighters . Chairperson Olson stated the approval was necessary if there was an essential change, but there has been no change in the benefit itself Mr. McNally disagreed. The Attorneys agreed to meet to discuss the issues . 4 Discussion followed relating to the amount of funds to be transferred and the current recipients . Chairperson Olson took issue with the accusation that the Board is somehow not acting in the best interest of the members. He feels that in the ten years he has been on the Board, regardless of the Board's membership, decisions have always been for the benefit of the members . Mr. Young commented on Mr. DeWitt's statement that there is no change to the benefit. He referred to an opinion letter in which Mr. DeWitt had stated that this is not a negotiated benefit, and the benefit could be withdrawn by a Code change from City Council. Mr. DeWitt clarified that the particular issue is in respect to the labor contract between the firefighters and the City. That particular document raises that as an issue . This particular transaction would continue the benefit in its current status . If comparing the proposed ordinance provision with the prior ordinance, it does not eliminate the benefit. Mr. Young feels that the ordinance could possibly place the benefit in jeopardy either by the current City Council or a future City Council. Chairperson Olson read into the record a portion of an opinion from Mr. DeWitt dated January 11, 1993, to all the Board Members : 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 . Chairperson Olson stated the ordinance reinforces the benefit in the Code, and nothing has changed. Mr. McNally referred to a memo from Dan Brotzman that seems to support the position that C.R.S. Section 31-30-417 applies, and it is necessary to receive 65% vote approval to change any benefits in the Firefighters Pension or Benefit Ordinance. The memo was in response to an inquiry addressing who must vote to change benefit of the plan, made by Chairperson Olson . Mr. DeWitt acknowledged the memo, but stated that it did not deal with this benefit issue. He further stated that a failure in Mr. McNally's analysis is assuming that C .R.S. Section 31-30-417 applies to this particular plan . Mr. DeWitt does not believe that it is applicable . Chairperson Olson stated that the issue appears to be whether the benefit plan would change . He does not feel that there is a change to the benefit plan, but stated if Mr. 5 McNally is correct, ifit were a change, it would require approval of 65% of the membership . Mr. Gruninger questioned ifthe ordinance could be changed so that no moneys were transferred from the pension plan. Chairperson Olson stated that there is no portion of the ordinance that refers to a transfer of money . Mr. Gryglewicz questioned the advantages ofleaving the funds for the current benefit recipients in the pension plan. Mr. Gruninger referred to prior comments made by Mr. DeWitt as to a question of the eligibility for individuals receiving benefits from this plan. Mr. Gruninger presented the scenario that after the transfer of funds to the Health Self Insurance fund, the City determines that the recipients of the benefits are no longer eligible to receive benefits, where would the funds go? Mr. DeWitt addressed the fact that the City does not determine the eligibility of the recipi ents, th e Board makes the determination . Mr. Gruninger's concern is if the funds are transferred from the pension plan and the City is going to take away the benefit to the individuals , who gets the money . He questioned if the money would be returned to the pension plan to help their unfunded liability. Mr. Gryglewicz clarified that when the funds are transferred to set up the new fund, the money will not be commingled to pay other benefits . If a recipient of the benefit were to discontinue receiving the benefit the funds would remain in the new fund to help fund the Firefighters' 20% Supplemental Disability Benefit. MAYOR WIGGINS MOVED TO ARRANGE MEETINGS WITH THE ATTORNEYS AND MR DEWITT AS SOON AS POSSIBLE AND ATTEMPT TO GET AN UNDERSTANDING BETWEEN THE ATTORNEYS IF AN VOTE OF 65% APPROVAL OF THE MEMBERSIDP IS NECESSARY. MR. GRUNINGER SECONDED. Ayes : Nays : Absent: The motion carried . Olson, Young, Resley, Gruninger, Wiggins, Gryglewicz None None Mr. Young offered a compromise. He referred to an actuarial study from 1990 listing the 20% Supplement Disability Benefit and on the most recent actuarial study from 1993 the benefit is listed as none. The compromise he offered is to leave the Old Hire Firefighters Pension Plan as it is with 20% Supplemental Disability Benefit intact and allow the Board to administer the benefit for those people currently receiving benefits . The new hires could 6 be put into the new Health Self Insurance fund, and this could be done without the transfer of any funds . In nine years no current recipient would be eligible, and the issue would be settled . Mr. DeWitt reminded the Board that there were actually two funds. The Firefighters Pension Fund and the Firefighters Benefit Fund. The payment that was to go into the Firefighters Benefit Fund actually went into the Firefighters Pension Fund . Mr. Young commented that all the funds were commingled and Mr. DeWitt stated that was the problem . Mr. Gryglewicz asked Mr. DeWitt for clarification if the ordinance is not passed the pension plan fund would still be liable for new hires benefit because they are included in the ordinance. Mr. Young, Mr. McNally and Mr. Seaks left 3 :55 p .m . Status of Fi re fighter's Grade Chairperson Olson reviewed a letter from Randie Barthlome . He feels Ms. Barthlome's recommendation to include the rank designation in the actuarial report may be the simplest solution . Mr. Young returned 4 :00 p .m. Mr. Gruninger disagreed with Ms. Barthlome's recommendation citing prior experience of confusing the reports and surveys . He also stated concern relating death benefits paid according to first grade firefighters pay . CHAIRPERSON OLSON MOVED TO ACCEPT MS . BARTHLOME'S OPINION AND RECOMMENDATION TO ATTACH AN AMENDMENT THE ACTUARIAL REPORT SPECIFICALLY DESIGNATING THAT THE FIRST GRADE FIREFIGHTER IN ENGLEWOOD EQUATES TO A THIRD CLASS FIREFIGHTER. MR. GRUNINGER SECONDED . Ayes : Nays : Absent: The motion carried . Olson, Young, Resley, Gruninger, Wiggins, Gryglewicz None None 7 Discussion oflnvestment Managers Search Mr. Gryglewicz suggested the Board review the literature from the investment manager candidates before the next Joint Board Meeting on October 27, 1993 . MEMBERS CHOICE Board Election Chairperson Olson reminded the Board that his term expires December 31, 1993 and requested the election process be started . CHAIRPERSON OLSON MOVED TO PROCEED WITH AN ELECTION TO FILL THE BOARDS IMPENDING VACANCY. MR. GRUNINGER SECONDED . Mr. Edison suggested the voting process be monitored . Ms. Wescoat invited Mr. Edison to review the procedures done to insure accuracy in the election process. Ayes : Nays : Absent : The motion carried . Olson, Young, Resley, Gruninger, Wiggins, Gryglewicz None None Jam es Haugsness Request for Retirement Benefit Chairperson Olson reviewed James Haugsness, a terminated vested firefighter, request for retirement benefits to begin as of January 6, 1994, his 50th birthday . He suggested approval of the benefit prior to receiving all calculated benefit amounts because the next meeting will be after Mr. Haugsness eligibility date. Even though the normal routine would be to notify the terminating employee of their vested benefit, there is not any record of Mr. Haugsness previously being notified of the benefit amount. MR. GRUNINGER MOVED TO BEGIN PAYMENT OF BENEFITS TO JAMES HAUGSNESS ON HIS ELIGIBILITY DATE AND HE BE NOTIFIED OF PAYMENT DATES . MAYOR WIGGINS SECONDED WITH A PROPOSED FRIENDLY AMENDMENT REQUESTING THAT THE BOARD BE COPIED ON THE LETTER TO MR. HAUGSNESS. Ayes : Nays : Absent: The motion carried . Olson, Young, Resley, Gruninger, Wiggins, Gryglewicz None None 8 MAYOR WIGGINS MOVED TO ADJOURN. MR. GRUNINGER SECONDED. Ayes: Nays : Absent : The motion carried . Resley, Gryglewicz, Olson, Wiggins, Young, Gruninger None None Meeting adjourned at 4 :10 p .m. tl«o-tW~ Carol Wescoat Recording Secretary 9