Minutes for the June 2, 2016 Meeting of the Board

Transcription

1 MEETING OF THE RETIREMENT BOARD OF THE COUNTY EMPLOYEES AND OFFICERS ANNUITY AND BENEFIT FUND OF COOK COUNTY AND EX OFFICIO FOR THE FOREST PRESERVE DISTRICT EMPLOYEES ANNUITY AND BENEFIT FUND OF COOK COUNTY 33 N Dearborn St, Suite 1000 Chicago, IL Minutes for the June 2, 2016 Meeting of the Board The and the Forest Preserve District Employees Annuity and Benefit Fund of Cook County are herein collectively referred to as the Fund. Call to Order and Roll Call Trustees Present: Staff Present: Others Present: John Fitzgerald, Diahann Goode, Alexis Herrera, Bill Kouruklis, Brent Lewandowski, Patrick McFadden (departed during Item 5), Joesph Nevius Dennis White, Lawrence Wilson Nickol R. Hackett, Executive Director & CIO; Michael Maratea, Director of Finance and Administration; Gary LeDonne, Senior Benefit Advisor; Margaret Fahrenbach, Legal Advisor; Paul Rzeszutko, Director of Annuity Benefits; Brenda Deming, Director, Health Benefits; Beverly Romanini, Office Manager; Courtney Hollins, Senior Communications Specialist; Marina Sirot, Project Compliance Analyst; Keitric Emory, IT Business Analyst Mary Pat Burns, Burke Burns & Pinelli; Larry Langer and Dan Levin, Buck Consultants; John McCabe and Robert Molaro, John McCabe & Associates; Colin Thompson and Tim Fagan, Legacy Professionals, LLP; Abin Kuriakose, Commissioner Gainer s Office Trustee Herrera, President of the Board, opened the meeting for public comment and no one having requested to address the Board, the next item of business on the Agenda was considered. 1. Review and Consideration of: a. May 5, 2016 Board Meeting Minutes Trustee McFadden stated that item 3b on the presented minutes of the May 5, 2016, Board meeting should be amended to reflect that the Board should be advised of all persons who requested the Benefits Systems RFP. It was then moved by Trustee McFadden and seconded p. 1

2 by Trustee Lewandowski that the minutes of the May 5, 2016 Board meeting, as amended, be adopted. 2. Review and Consideration of: a. Bills, Payroll Records The Fund s monthly bills and payroll records were presented for the Board s approval. It was then moved by Trustee Goode and seconded by Trustee White that the action taken by the Fund s staff in remitting payments for the presented bills and payroll records be approved. b. Annuities, Spouse and Child Annuities and Refunds The Fund s staff presented their recommendations to the Board regarding the applications for annuities, spouse and child annuities, and refunds and confirmed that they followed the Fund s procedures in reviewing and processing the applications in making their recommendations. It was then moved by Trustee White and seconded by Trustee Fitzgerald, after due consideration of the applications presented to the Board and having received confirmation from the staff that they followed the Fund s procedures in reviewing and processing the applications, that the recommendations for the presented annuities and refunds be approved. c. Ordinary and Duty Disabilities The Fund s staff presented their recommendations to the Board regarding the applications for ordinary and duty disability benefits and confirmed that they followed the Fund s procedures in reviewing and processing the applications in making their recommendations. p. 2

3 It was moved by Trustee Goode and seconded by Trustee Lewandowski, after due consideration of the disability applications presented to the Board and having received confirmation from staff that they followed the Fund s procedures in reviewing and processing the applications, that the recommendations for the presented disability applications be approved. 3. Administrative Report a. Disaster Recovery Recommendation and Approval Michael Maratea, Director of Finance and Administration, responded that the Fund needed to implement a new disaster recovery solution. He stated that beginning in 2006five local funds shared a leased facility in Lombard, Illinois, to be utilized in the event of a disaster. The lease is to expire in September, 2016, and after exploring the option to extend the lease, the local funds each determined that they would consider independed alternative DR solutions. Mr. Maratea stated that the Fund had identified four service providers as host back-up solutions that could provide the support necessary to access the Fund s systems in the event of a disaster and presented a comparison of each of the entities. Additionally, the Fund would need to identify a location where staff could perform its functions in the event of a disaster. Mr. Maratea stated that SingleHop, LLC, presented the best match for the Fund s current infrastructure, provided the needed level of security and had a short recovery time to restore the Fund s systems. It was moved by Trustee Nevius and seconded by Trustee McFadden that the Board approve the retention of Singlehop LLC to provide data and systems required by the Fund for disaster recovery for a three year term at an annual cost not to exceed $38,400 and it is further moved that Fund staff take all action reasonably necessary to effectuate the foregoing including the execution and delivery of related written agreements by the Executive Director on behalf of the Fund. b. Communications Recommendations and Vendor Approval p. 3

4 Brenda Deming, Director of Health Benefits, stated that the Fund needed to prepare communications to members that are required in order to implement the Medicare Part D Group Waiver Plan ( EGWP ). She proposed the engagement of a vendor to ensure that Fund is in compliance with EGWP requirements. Trustee McFadden questioned whether the engagement of an outside vendor was necessary. Ms. Deming noted complexity and volume of the communications would require an experienced vendor with more substantial resources and that the implementation credit to be provided by CVS/Silverscripts could be used for this expense. She stated that the Fund had identified three vendors who could provide this support, but that the ROC Group could best accommodate the Fund s needs at a competitive cost. It was moved by Trustee Fitzgerald and seconded by Trustee Goode that the Board approve the retention of the ROC Group to provide the communications support that is required for the implementation of the Medicare Part D Employer Group Waiver Plan at a cost not to exceed $50,000 and it is further moved that Fund staff take all action reasonably necessary to effectuate the foregoing including the execution and delivery of related written agreements by the Executive Director on behalf of the Fund. Goode, Fitzgerald, Herrera, Kouruklis, Lewandowski, Nevius, White, Wilson McFadden c. Presentation to Sub-Committee on Pensions Nickol R. Hackett, Executive Director, stated that the Fund was requested to appear before the Board of Commissioners of Cook County Pension Committee on June 8, The Fund s appearance before the Committee, which is chaired by Commissioner Bridget Gainer had been made periodically after in connection with the County s pension reform efforts. The Executive Director stated that the Fund s actuary, Buck Consultants, LLC and the Fund s Counsel, Mary Pat Burns would also be in attendance, in addition to members of the Fund s staff. 4. Presentation of FY 2015 Audited Financial Statements Colin Thompson and Tim Fagan of Legacy Professionals, LLP, presented the 2015 audited financial statements for the County Fund and the Forest Fund. The financial statements for both Funds were a combination of the plans fiduciary net position and the postemployment healthcare net position as of December 31, Trustee Wilson noted that the County Fund had received additional contributions in 2016 from the employer pursuant to the Intergovernmental Agreement entered in December, 2015 that were not reflected in the County Fund s 2015 financial statement. Mr. Thompson noted that the payments were received in 2016 and would be reflected in next year s statements. The trustees stated that the additional contributions were material and significant and could be so noted in the 2015 financial statements. Legacy Professionals agreed to provide that p. 4

5 notation and would amend the 2015 County Fund audited financial statement to show the receipt of the additional contributions as a significant subsequent event. Trustee McFadden asked whether the actual investment returns in the last thirty years would support the Fund s actuarial discount rate. The Director of Finance stated that over the last thirty years, the investment return for the County Fund was 7.6% and for the Forest Fund was 8.0% and he was able to provide the documentation requested to Trustee McFadden. It was moved by Trustee Lewandowski and seconded by Trustee Goode that the 2015 Audit of the Forest Fund as prepared by Legacy Professionals, LLP, be received and filed. It was moved by Trustee Lewandowski and seconded by Trustee Goode that the 2015 Audit of the Forest Fund as prepared by Legacy Professionals, LLP, be received and filed. 5. Presentation of FY 2015 Actuarial Valuations Larry Langer and Dan Levin, of Buck Consultants, LLC, presented the 2015 Actuarial Valuations for the County Fund and the Forest Fund. Mr. Levin made the presentation of the report relating to the post-employment health insurance benefits ( OPEB ) provided by each Fund which showed the valuation of retiree health benefits to annuitants as of December 31, Mr. Langer made the presentation for the actuarial valuations for pension benefits relating to each Fund as of December 31, Mr. Langer stated that the Fund s investment returns in 2015 were similar to the returns experienced by similar plans, but that the statutory funding policies for both the County Fund and the Forest Fund are not sufficient to keep the unfunded liabilities from growing. The presented valuations showed increases to the unfunded liability for both the County Fund and the Forest Fund. The acturiary reported that the Cook County Fund s assets were valued at $9.0 billion on an actuarial basis with liabilities of $16.2 billion, resulting in an unfunded liability of $7.2 billion (or 55.4%). Relative to the 2014 valuation, the Cook County funded ratio decreased to 55.4% from 57.5%. The actuarial projected insolvency date is For 2015, the Forest Preserve District Fund s assets were valued at $193.7 million on an actuarial basis with liabilities of $322.7 million, resulting in an unfunded liability of $129.0 million. The funded ratio remained flat on an actuarial basis at 60.0%, but is estimated to be 42.0% on a GASB basis. The actuarial projected insolvency date is As consistent with prior years, there were no changes in plan provisions or the funding policy. The actuary estimates that the statutory employer contribution for 2015 represents less than 25% of the actuarially required amount, a shortfall of $11.5 million. It was moved by Trustee Goode and seconded by Trustee Lewandowski that the 2015 Actuarial Valuation of the County Fund as prepared by Buck Consultants, LLC, be received and filed. p. 5

6 It was moved by Trustee Goode and seconded by Trustee Lewandowski that the 2015 Actuarial Valuation of the Forest Fund as prepared by Buck Consultants, LLC, be received and filed. 6. Legal Matters a. In the Matter of Jaime Baez Margaret M. Fahrenbach, Legal Advisor, stated that at the Board s meeting on May 5, 2016, it had scheduled a hearing before it to determine whether Mr. Jaime Baez, who had been convicted of a felony in the Circuit Court of Cook County, had forfeited his annuity benefits pursuant to Section of the Pension Code. At that meeting, the Board had also suspended Mr. Baez annuity and health benefits. She advised that, through his attorney, Mr. Baez had requested that the hearing be continued to a later date. Because it will be a contested matter, it was proposed that the Board appoint a hearing officer to make a recommendation to the Board about the suspension of Mr. Baez benefits should continue until a decision is made by the Board regarding his eligibility. It was moved by Trustee Fitzgerald and seconded by Trustee Nevius that the Board appoint Mr. William Motto to serve as a hearing officer to review the record relating to the felony conviction of Mr. Jaime Baez, to convene an administrative hearing to allow Mr. Baez the opportunity to be heard and to be represented by counsel and to make a written recommendation to the Board about Mr. Baez eligibility for benefits. It was further moved that Mr. Baez annuity benefits, including health benefits, would be suspended until the Board made a decision regarding his eligibility for benefits pursuant to Section of the Illinois Pension Code. b. Matthews v. Chicago Transit Authority Mary Pat Burns, Fund Counsel, summarized the recent Illinois Supreme Court decision of Matthews v. Chicago Transit Authority which addressed retired CTA employees right to health benefits. She stated that certain portions of the decision were clear but that the decision raised questions as to how pension funds would apply the decision. The issue in Matthews was whether health care benefits provided to CTA employees who retired under a 2004 collective bargaining agreement were vested rights that could not be diminished or impaired through a subsequent collective bargaining process. The Court in Matthews held that health insurance benefits could be modified by a union collectively bargaining the rights of active employees, including the right of such employees to receive health care benefits upon their subsequent retirement, provided the underlying collective bargaining agreement allowed for the subsequent modification of health care benefits. The p. 6

7 Illinois Supreme Court seemed to further hold that the health benefits of the current retirees involved in the Matthews case could not be affected for two reasons. First, retirees were not represented in the collective bargaining process; and second, such health care benefits were fully vested upon retirement under the then existing collective bargaining agreement. The Court stated that whether the parties to a collective bargaining agreement intended to vest post-retirement medical benefits was a matter of contract, which implies that perhaps a case by case analysis is necessary.. She noted that if this implication is right, the administration of retiree health benefits under multiple collective bargaining agreements would likely be cumbersome for plan trustees. 7. Report from Legislative Liaison John F. McCabe and Robert S. Molaro appeared before the Board and reported the status of the bills before the General Assembly that affected the Fund. Mr. McCabe stated that SB 2817 and SB 2819 had passed, but had not yet been sent to the Governor. Trustee Wilson inquired about the inclusion of the FPD in the flexible funding bills. It was noted that FPD have same flexilbity. The trustees asked why Mr. McCabe had testified before the House Personnel and Pensions Committee on March 3, 2016, regarding HB 6130 which would allow County employees who were employed after January 1, 1993, to purchase military service credit. Mr. McCabe stated that he was asked to testify by the sponsor of the bill and by the House staff. He added that he had filed a witness slip stating that the Fund did not take a position on HB The trustees discussed that they had requested the Fund s actuary to determine the impact of HB 6130 at their meeting on March 3, 2016, at the same time that Mr. McCabe was testifying. Trustee Lewandowski inquired about the lobbyists testimony to a house committee on behalf of the pension fund regarding military service. The trustees emphasized that the Board cannot advocate for increased benefits and that it was imperative that the Fund s Legislative Liaison work in conjunction with the Board. The trustees also discussed whether taking a no position on a bill could be viewed as tacit support and whether its legislative policies should be reconsidered. Mr. Molaro stated that the House Committee s staff would analyze a bill and would call a legislative representative to determine the affected entity s position on the bill. He added that it would be impossible to refuse to answer questions from the Committee. Mr. McCabe stated that he did not appear before the Committee in support of HB Old Business/New Business President Herrera stated that Patrick Nester had separated from County service and would no longer serve as the County Treasurer s designee to the Board. The President added that the Treasurer had appointed Bill Kouruklis as her new designee to the Board and welcomed him. 9. Adjournment There being no further business before the Board, it was moved by Trustee Fitzgerald and seconded by Trustee Nevius that the trustees adjourn the meeting. The next Board meeting is scheduled for July 7, 2016, at 9:30 a.m. p. 7