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HomeMy WebLinkAbout2006-08-01-10:00AM-WORKSHOPBRAZOSCOUNTY BRYAN,TEXAS NOTICE OF MEETING AND AGENDA BRAZOS COUNTY COMMISSIONERS COURT WORKSHOP SESSION THE COMMISSIONERS COURT OF BRAZOS COUNTY WILL MEET IN A WORKSHOP SESSION ON TUESDAY 1 AUGUST 2006 AT 10:00 A.M. IN THE COMMISSIONERS COURTROOM OF THE BRAZOS COUNTY COURTHOUSE, 300 E. 26TH STREET, SUITE 115, BRYAN, TEXAS. 1. Call to Order 2. Review of Brazos County retirement rates and options. 3. Adjourn The Brazos County COnrthUniC is wheelchair accessible. Handicap parking spaces are available. Any request for sign interpretive services must be made two business days before the meeting. To make arrangements, call (979) 361-4102. Office of the County Judge • 300 East 26" St. • Suite 114 . Bryan, Texas 77803 • Fax: (979) 361 A503 VU '93 F~~".;E q-9 COMMISSIONERS' COURT WORKSHOP SESSION August 1, 2006 The Commissioners' Court of Brazos County, Texas met in a Workshop Session in the Commissioners' Courtroom in the Courthouse in Bryan, Brazos County, Texas, beginning at 10:00 a.m. on Tuesday August 1, 2006, with the following members of the Court present: Randy Sims, County Judge, Presiding; Lloyd Wassermann, Commissioner of Precinct 1; Duane Peters, Commissioner of Precinct 2; Kenny Mallard, Commissioner of Precinct 3; Carey Cauley, Commissioner of Precinct; Absent. Karen McQueen, County Clerk. Attached is a list of the citizens and officials in attendance. Attached is a transcript of the meeting. Vol o-.3 Page So 2 BRAZOS COUNTY COMMISSIONERS COURT Review of Brazos County Retirement Rates and Options. August 1st, 2006 Sims: It is 10:01 and I will call this workshop session into order and it has to do with the retirement plan assessment for Brazos County for the year 2007. Who do we have that is going to speak to us? Nichols: We have Howard Miller. Sims: Good. Thank you. You can use that over there or whatever you would like to do. Miller: I'm fine right here. Sims: Ok, thank you for coming Howard. Miller: My pleasure... it's good to see you again this year. What I did was try to put together a small, quick presentation that I can run out to you in fifteen minutes. The options that you have and go over what your rates are for next year and why they changed. Part of the reason I love coming down here is because every year for three years, yall have invited me out to go over your rates. I don't know how everybody else does it but I think it's great that yall do. It doesn't take much time and it goes pretty... Sims: We want to hear from you as to where we are and what we need to be doing. Miller: Sounds great. Inside your packet is a little presentation like this and if we turn to the second page, it's just a reminder of what the court can do. You set your employee contribution rate between 4% and 7% and (inaudible) always has at 7%. Setting the county's matching rate. The current statute allows for 100% to 250% and we can now move in 5% increments which is a change in the law in the 79`h session. Here in Brazos County between 1968 and 1994, you Vol 95 Page 61 3 guaranteed all of your employees a 320% match. That can never go away. In 1995, you reduced that to 230% and it stayed 230% for '95, '96, and '97. From 1998 on, you had a 225% match and that's how it stands right now. Here in Brazos, you always have the ability to set three different tiers of retirement eligibility. You have eight years with age 60, the rule of 75, and 30 years of service now. So the only option you have to actually enhance is the 20 year and out option. Only about 18% of counties in the state have that option. Want to keep those experienced people. Just a reminder; when people are looking at the return to work and you are aware of it, I'm sure. You can now rehire your retirees. And we see across the state, people think that, "The best thing for me to do is to retire, start getting a retiree check, and try and get hired back with the county." I put this slide in here simply to remind you that the biggest factor increasing your employee's pension checks is compounding. And you can see that illustrated with somebody with ten years of service making $3,000.00, earning $1,676.00 or somebody with 25 years of service contributing the same annual contribution of $3,000.00 making $9,904.00. Time is on somebody's side not just from the years they service but from the accumulated balance they have compounded. I just like to highlight that so that when you're looking at somebody in there saying, "You know, I either want a higher match or I want to get out of here and be rehired." You can remind them that the best way to make a retirement for yourself is to stay here and let it keep growing. I threw a slide in here that show all sorts of benefit levels. What I was trying to show you with this slide is what are you providing your employees today? So what I do is I look out and I think about a twenty-five or thirty year employee that works there with Brazos County and I can say that if you have 30 years with Brazos County... even at the 225% match rate, you're looking at about 95% of your replacement income for life. It's a great benefit you offer your employees and a great level of benefits. The last line on here tells you that you do have the option as a court of adding partial lump sum distribution. Brazos County doesn't have that and I always caution people against it because one thing that you forget about is in our system when somebody retires from Brazos County, all of their account gets paid out first. If you have this option in your plan, it allows an employee to take out up to 100% of their benefits first and start getting a monthly payout from the district of the county's matching funds. Is it going to cost you more in the long run, it will. Because potentially you're going to be paying out first. Vol Page Sca 4 Page five; providing COLAs for retirees. Yall took action on this twice; once last year after I was here you did a 50% CPI COLA for your retirees. Did anybody come up and say, "Thank you so much?" Sims: Didn't hear from a soul. McLeod: Yes you did. Miller: Well, they appreciate it. Sims: I didn't. Did you write me a letter about that? McLeod: I did not, I thanked you personally sir. Miller: I knew they appreciated it. That's an action item every single year that you can choose to do or not to do. Basically, the way you could look at it...every retiree you've ever had a Brazos County is now caught up with 50% of the consumer price index published by the Federal government through 2004. It's a great position to be in. They are not hurting as bad as they once were. If you look at the numbers from your almanac this year, which you all got, you saw that I think it was .37 of your overall payroll to take that action last year. This year it has dropped. If you took the same action it would be .14 because you've caught everybody up. What some people don't see on that is that you actually accumulate some additional unfunded liability when you do that. All of the cost is taken over in that next year's payroll increase. It's actually amortized in your plan over a long period of time. Before I turn the page I just want to remind you that you do have optional group tern life insurance available through the trust. Nichols: We have options. Miller: I'm going to double check. McLeod: Not thorough the retirement system. Miller: Not through the retirement system. Nichols: Oh, that's right, I'm song. Miller: It is, if yall are really looking, go ahead and get a quote on what the rates are. We send them to you every year. It's a separate trust fund and basically it provides employees with one time their annual salary while they are working Vol 93 Page 63, 5 here or as a retiree at flat $5,000. It's a term insurance administered by the trust fund. Page six talks about the rates and this was one thing I wanted to highlight. Yall have been doing a great job in the fact that your rate has been stable, your unfunded liability has been stable, and you've been growing toward more funded. You did take a little step back last year but not something you could have controlled. Your plan experience for the plan for 2005 was actually positive on demographic returns from our actuaries. What happened was every four years we do an experience study to make sure that the assumptions our actuaries are using are accurate. Well, guess what? People are living longer and we changed our mortality table and people are figuring out that the benefit that you provide them is an honest one. So even if I have eight years here with Brazos County, I'm 40, and I leave ...I leave my money in. Because they know at 60, you are going to match those funds. Those two things were the biggest reason for you rate increase. So what this does is that the top slide shows you from right to left 2005, 2006, and 2007 plan years, everything looks very stable to me. The major reason for the rate increase this year is that experience study, nothing that the population here in Brazos County did. The only other thing that caught my eye was the change in your unfunded liability, that increase of over a million. And that was in direct relation to the cost of living adjustment that you approved last year. Of course this year it wouldn't be as big of a number. In fact, I just calculated it, you did the same action this year ...I think it was 1.4 million last year and will be $410,000.00 this year. And again, that's not a number that comes out next year, that's amortized over the twenty year period. I hope that you looked at your almanac that we sent everybody on the court this year. This is just a picture of that but my favorite thing about it was we've never told you, other than me coming out here, why you're rates changed. So we've got a five year history here showing why you're rates changed. I marked greens with positive. This chart is a little strange but if you notice the greens have negatives in front of them; in our world a negative is a positive. It's negative plan experience causing a rate decrease. So the red shows the negative and as you can see on 2006, 2007, that .78 was the major influence in your rate increase for this year. Nothing you could have done about it, it's us studying ourselves and saying, "People are living longer. People are valuing the benefits you offer." That will set for four more years and we will reevaluate it again. Vol 8-3 Page 5 4 6 Last page; the pitch to always make additional contributions. I was talking to Loraine in the hall and yall are sitting in a wonderful place. You are about 82% funded, but I did read an article in the San Antonio Express that was just out this Sunday on TMRS and us and plans in Central Texas. I'll give you some examples: the Texas Teachers Retirement System is about 88% funded. Our system as a whole, the 575 plans that participate with us...if you take them as a whole and add in our reserves... were 104% funded. I would put you in the bottom third to quarter of funding in the state as far as major counties. It's one thing to consider ...not a good year to think about doing an additional elected sum like picking 11.5 to do for the year or like having extra money put in a lump sum anytime. But what I would say is next year when you get your rate after this experience study, is you have a significant decrease in your rates, consider leaving them the same. It'll help bring that funding level up because every additional dollar you do above what we say is the required rate, as the Governmental Accounting Standard Board's required rate... goes directly to pay off unfunded liability. Every dollar. So that's one way you can position yourself better and give yourself a little more flexibility with future COLAs, or benefit increases. Sims: And you said it would help to change that unfunded balance was the COLA we gave the retirees, is that correct? Miller: Yes sir. It was a .37, by memory, increase on your payroll... it's on page five ...we went from a 10.59 to 10.96. So the difference there was the rate increase that you had but what, in actuality, happened was about a 1.47 million dollar increase to your unfunded liability. Unfunded liability is always amortized over a rolling twenty. So it doesn't go 19, 18, 17, it always stays the 20. Part of your rate is always planned on paying off that unfunded liability but it's a minor part. So if you take action to do a little extra when you do have a rate decrease here, goes a long way. Mallard: Are there some counties that have no unfunded liabilities? Miller: Yes sir. There are over-funded plans with us. Definitely. An actuary would tell you that it's not necessarily a place to be but they won't ever stay where you should be. Mallard: That would be nice for a little guidance on this. Vol 93 Page 65 7 Miller: The majority of our plans are between 85% and 89% funded. That is where you find the biggest conglomerate. It's about 140. Everyone else is spread out. You remember that when we have new plans come in that provide prior service; say another Water Control Irrigation District in Brazos County comes in and offers their employees benefits for the past work they've done ...they're going to start at 30 % - 40% funded so take it with a grain of salt. Brazos County is not going out of business, you always having taking ability but it is something that you want to monitor each year and I'll be glad to come over and go over it with you every year. I'd never say you are in a bad position ...I would say that you are lower in the funding position than other counties you're size across the state might be something to consider in the future. Sims: And that's some of the things we are going to have to really watch very carefully when the legislature goes back into session and starts talking appraisal caps and revenue caps ...it's going to limit our ability to reduce that unfunded. Miller: I understand and I've got some West Texas counties right now that are building off of oil and gas taxes and they're putting in a lump sums. They are handling different than they did in the 80s. Sims: Pretty smart. While they got it coming in they may as well do some of that. Miller: Exactly. Sims: You bet. Miller: We all have the budget constraints so you work with what you're in but like I said, if you have a year where you've budgeted this 11.36 and it goes down to 10.96 again next year, it might be a great opportunity. Sims: Right. Miller: That's all I really wanted to go over but if you have any questions for me, I can surely answer any. Sims: You have any questions for Howard? Mihavics: I wondering if some of you would come to our prospectives meeting in the next year. We just had it last week and I know it's a hard time during budget time but had about 170 people were represented. It gives Commissioners' and Judges credit hours for continuing education and it's a good class. We had Jim Carney out there. He was on the President's plane during 9/11 and the press Vol 93 Page 6 (P 8 corps had a good speech on what's happening on the Federal level as far as pension reform. Sims: This is a good retirement plan, believe me. I'm making use of it Ruth. McLeod: Yes you are. Sims: And so are you. Miller: Like I said, I'm always available. I didn't put my card in here but Loraine always has the ability to get with me. I'm available to answer questions you have at any time regarding this whether it's budget time or you just want to review your plan. Sims: Thank you. Miller: Thank you. Sims: Appreciate it. Is that all we have on this workshop? I will move that we adjourn this workshop. McLeod: Judge, just don't forget to put something on the agenda that we either make a decision it or not change it before the September the Is`, I think. Mallard: Can we do that for next week? Sims: Sure. I move to adjourn this workshop. I need a second. Mallard: Second. Sims: All those in favor signify by saying, "Aye." End of tape. Vol 83 Page 57 9of9 The foregoing minutes of the Commissioners Court Workshop held August 1st , 2006 , have been examined and approved in open Court this theft day of , 20(g, in Bryan, Brazos County, Texas. Randy S County Duane Peters Commissioner, Precinct No. 2 Lloy Wassermann Commissioner, Precinct No. 1 Kenny Ma 1 rd Commissio er, Precinct No. 3 Attest: Karen McQueen County Clerk Vol 93 Page ,S:' BRAZOS COUNTY COMMISSIONERS COURT / SF DAY OF J`qa , 20 e6 AT to , oo AM/PM Name 0 - ~o~.~-., ~r n o 1 ~J ~nLt Organization -t-C D e-S A A0 f s C-c. P--a & . eik