SPECIAL CIVILIAN PENSION BOARD

The Civilian Pension Board meeting was held on March 26, 2008 at 1:41 p.m. with Councilman Hogan presiding. Members present were Mr. McGiffin, Mrs. Mitchell, Mrs. Rigby, and Mr. Lucas. Mr. DePrima. Mrs. Braun was absent. Others present were Mrs. Hawkins and Mrs. Clendaniel.

AGENDA ADDITIONS/DELETIONS

Mr. McGiffin moved for approval of the agenda, seconded by Mrs. Mitchell and unanimously carried.

COLA FUNDING PROPOSALS

During their meeting of February 29, 2008, members continued their discussion regarding alternatives to the standard across the board pension cost of living adjustment (COLA).

At the request of the City Manager, Mrs. Hawkins, Human Resources Director, provided members with an analysis of the City’s costs for employees of the Defined Benefit Plan versus the 401 Retirement Plan (Attachment #1).

Mrs. Mitchell, Controller/Treasurer, stated her disagreement with the analysis, explaining that the unfunded liability should not be included in the analysis since the City selected the manner in which to handle the unfunded liability and the employees have no control over the unfunded liability.

In response to Mr. Hogan, Mrs. Mitchell reminded members that during the previous meeting, she provided members with a proposed policy which would establish a process for Ad Hoc Pension COLA (3-Year Funding Process).

Based on previous discussions, Mr. Hogan noted that the options available for alternative COLA funding are as follows: 1) Unfunded COLA; 2) Fully funded COLA; 3) Partially funded COLA; 4) Multiple year, fully funded COLA process; 5) No COLA (No process for COLA) and 6) Stipend. It was his feeling that these options would be presented to Council for a final determination and that the Board should prioritize the options for their consideration.

Referring to providing a Stipend, Mrs. Mitchell advised members that the Actuary has indicated that by providing a stipend, it may be an indication that there is a separate pension plan and require the City to establish an additional pension plan. She explained that if stipends are provided to retirees rather than providing a COLA to retirees through the pension plan, it may be perceived as a separate pension plan, similar to the State. She reminded members that the Stipend for retirees recommended by the Board for this next year is being paid through the General, Water/Wastewater, and Electric Funds, rather than the Pension Fund, thus will not be added to the unfunded liability.

Mr. Hogan suggested that the pros and cons be provided for each of the options for a presentation at a City Council Workshop. Mr. McGiffin noted that there are several levels of decisions necessary, such as if a COLA should be provided and if so, how it would be funded, as well as other issues. It was his feeling that before a recommendation could be developed by the Board, a determination of these issues would be necessary. Concurring with the workshop concept, he felt that it may be the best means for making the necessary determinations.

Mrs. Mitchell explained her concerns regarding the need to review other post-employment benefits and their budget impacts. She suggested an education process with retirees to explain the City’s costs for future benefits.

Responding to Mr. McGiffin, Mrs. Mitchell explained that unlike deferred pension plans (401K), COLA’s are a typical feature for defined pension plans.

After much discussion, Mr. Hogan suggested that a workshop be scheduled (during the summer months) with City Council and that he would work with the Treasurer/Controller to prepare a presentation. He suggested that retirees be notified and invited to attend the workshop as well as current employees.

For clarification regarding the recent recommendation to provide a stipend to retirees, Mrs. Mitchell confirmed that all retirees, not just those over the age of 65, will be provided a stipend, which the amount will be based on their age and that this stipend will be provided to those who have retired prior to January 1, 2008.

Mr. Lucas moved for adjournment, seconded by Mrs. Rigby and unanimously carried.

Meeting Adjourned at 2:15 P.M.

Respectfully submitted,

Kenneth L. Hogan

Chairman

KLH/TM/ac/jg

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