NON-CERTIFIED EMPLOYEE RETIREMENT PLAN (NCERP)
COMMITTEE MEETING
November 9, 2011
MINUTES
CALL TO ORDER
Ms. Vicki Lucido called the regular meeting of the NCERP Committee to order at 9:15 a.m. in
the Confluence Room on the Meramec Campus.
Members Present
Others Present
Vicki Lucido, Chair
Ruth Lewis
Kevin White
Mike Wibbenmeyer, Vice Chair
Calla White
Bruce Vogelgesang (ex officio)
Roy Shaneberger (ex officio)
Kimberly Mueller
Julie Hupperts (Towers Perrin)
James Hayden, Plan Coordinator
Jim Wilkinson (Columbia Management
Mike Hillary (Clifton Gunderson LLP)
Mary Holtz
Tim O’Neil
Jeanne LaMar
Debbie Duane
Pat Whithworth
Jo Moore
Warren Smith
COMMENTS FROM PARTICIPANTS
None
APPROVAL OF MINUTES
Regular Meeting Minutes of August 10, 2011
Ms. Lewis moved that the minutes of the regular meeting of August 10, 2011 be approved as
written. Ms. White seconded the motion, and the motion carried.
CLIFTON GUNDERSON’s ANNUAL AUDITOR’s REPORT
Mr. Hillary gave the results from the audit conducted on the fiscal year ending June 30, 2011.
He stated that the financial statements for the audit presented fairly and ended in conformity with
accounting principles generally accepted in the United States. Mr. Hillary stated that the net
assets for the fund are $62,686,680 and up $9 million from last year. The Plan had a market
gain of $12 million compared to $6.7 million last year; contributions were less at $1.8 million
for the year compared to $2.2 million last year; deductions almost doubled to $5.2 million
compared to $2.4 million last year; and the net increase was up to $8.6 million this year
compared to $5.4 million last year. Mr. Hillary stated that the benefit obligations are at
$49,600,000 compared to the funding net assets available for benefit of $62,686.860. Thus the
Plan is well over funded and this is good news since many retirement Plans are under funded
INVESTORS’ REPORT (via telephone)
Columbia Management’s Investment Presentation as of September 30, 2011.
Mr. Wilkinson opened his presentation by stating the 1st quarter was challenging and we have
been fighting headwinds and the most recent headwind is the financial conditions stemming from
the Euro-zone debt crisis. The Euro PIIGS (Portugal/Italy/Ireland/Greece/Spain) continue to
cause problems in the market with their banking crisis and sovereign debt rising over 100 per
cent. Mr. Wilkinson indicated that problems between 17 counties and their rulers has caused the
market to be volatile as talks of the resignation of the Italian Prime Minister continue. Mr.
Wilkinson stated that the unemployment rate continues to remain about 9 per cent in the US, and
the European Union is around 10.3 per cent. The housing bubble is working its way through at a
snail’s pace and weather events over the past year have caused supply chain disruptions. Mr.
Wilkinson stated that the question of another recession continues to circulate and now appear
near a 50/50 chance in the next 12 months. He stated that they continue to monitor recession
signals, many pointing at rising risks in the future. It is not inevitable, the economy must
improve.
Mr. Wilkinson reported that the market value of the Plan began at $62,672,388 on July 1, 2011
and as of September 30, 2011 the Plan value was $55,747,399 due to poor equity markets. The
good news is that the Plan had a good bounce in October and as of October 31, 2011 the value
was $59,750,000. Mr. Wilkinson stated that the Plan continues to remain well diversified. The
equities were down miserably for the quarter at negative 17.73 per cent but have bounced back
7.5 per cent in October – this is the largest increase since December 1991.
Mr. Wilkinson asked if there were any questions. No questions were asked.
REPORT ON NEW PARTICIPANTS/RETIREES/RETURN OF
CONTRIBUTIONS/DECEASED RETIREES
Mr. Hayden reported that during the period of July 1, 2011 through September 30, 2011 three (3)
new participants were added to the Plan and four (4) separated from the College. The returned
contributions and credited interest for those individuals who left the Plan totaled $33,401.25.
During the same period, two (2) Plan participants chose to retire. One (1) chose the Annuity pay
Option and one (1) chose the Lump Sum Payment totaling $80,362.26. Two (2) retiree deaths
were reported during this period.
SUBMISSION OF BILLS
Ms. White made a motion, seconded by Ms. Lewis, to ratify the payment of the six (6) bills
presented to the Committee during the reporting period. The motion carried. The bills included:
Towers Watson – Actuarial Services (07/01/11-09/30/11)
$16,500.00
Columbia Management Investment Services (07/01/11-09/30/11)
$32,904.00
Steven Becker Fine Dining
$
(08/10/11)
117.50
State Street Bank and Trust Company (07/01/11-09/30/11)
$ 1,534.88
State Street Bank and Trust Company (07/01/11-09/30/11)
$ 10,692.59
CBIZ Accounting, Tax Advisory Services, LLC (09/30/11)
$
St. Louis Community College – Auditing Fees (10/07/11)
$ 5,600.00
863.75
REPORT FROM ACTUARY
NCERP Valuation Results as of July 1, 2011
Mrs. Hupperts stated that the actual asset return on the market value of assets was 23.3 per cent
as of June 30, 2011. The cumulative asset return over the past three years was 18.6 per cent
versus the cumulative expected return of 25.1 per cent based upon the actuarial assumptions.
Mrs. Hupperts further reported the long-term COLA assumption was for a 4 per cent increase per
year and January 2011 the COLA increase was 1.1 per cent and the January 2012 increase will
be 3.6 per cent. There were no significant gains are loses among the other demographic factors
reviewed during the evaluation process.
Mrs. Hupperts stated that the APV Accumulated Benefits currently are $49,600,000 and the
Market Value of Assets is $62,205,000. The funded ratio is 125 per cent Accumulated and 80
per cent of the Projected funded ratio, which is quite healthy compared to other funds. The
employer Normal Cost as the percentage of Pay is 6.81 per cent for this year and it was 6.57 per
cent last year, due to erratic market conditions.
In 2011 the funded ratio of Accumulated benefits went from 112 per cent funded to 125 per cent
funded. The Total (past + future) benefits went from 70 percent funded to 79 per cent funded.
The deficit position went from 14 per cent of APVFB to 5 per cent APVFB which means the
fund is currently 95 per cent funded for the long term.
Mrs. Hupperts explained that the long-term financial health of the Plan will improve if future
assets increase at a rate that expected or future liabilities grow slower than expected (or
decrease). The deficit will be eliminated if the asset returns are 15 per cent for one year or 8.9
per cent over the next five years. Contributions paid by both the employees and the College
could be increased from 4 per cent with a long term target is 5.12 per cent. Mrs. Hupperts
recommends that the Committee continue to monitor the Plan and take the appropriate action in
the future.
Mrs. Hupperts asked if there were any questions.
Mr. O’Neil asked if the contributions would need to be 6.28 per cent to meet the long term Plan.
Mrs. Hupperts stated yes, to meet future contributions levels, the employer portion would need to
be 6.28% based on the current employee contribution level.
Mr. O’Neil referred to page 5 of the actuarial valuation report and stated according to the
materials on this page we need to contributions increased to 6.81 per cent to fund the Plan for the
future. Mr. O’Neil asked (based upon page 5 of the document) if it should be double the 6.81 per
cent (Normal cost is 6.81 per cent of pay vs. contribution rate of 4.00 per cent) for both
contributions? Mrs. Hupperts stated that the 6.81 per cent is the employer piece, based on the
employee piece remaining at 4 per cent.
Mr. O’Neil asked to refer to page 11 (ERISA vs. RP200) and asked if the participants can vote
on which scale to use. Mrs. Hupperts stated that the auditors may want to discuss this with the
Committee. Mrs. Hupperts stated that ERISA is for private employers. Mr. Hayden stated that
NCERP is not under ERISA guidelines, but use ERISA standards as sound guidelines to follow.
Mr. O’Neil stated that the salary increase in the actuary valuation report reflects 4.75 per cent
and we haven’t seen that amount of increase in a long time. Can this be discussed? Can this be
changed? It was stated that Don Schisler, James Hayden and Roy Shaneberger can discuss this
and set assumptions for next year. Mrs. Lucido asked if this could off-set the mortality rate?
UNFINISHED BUSINESS
Mr. Hayden stated that the COLA calculations have been verified by the actuary and increases
are to begin on January 1, 2012 and all retired participants will be notified of the increase by mid
December 2011.
NCERP’s Operational Budget – Ending September 30, 2011 – James Hayden
The original Budget for the 2011-2012 fiscal year was $398,431.00 and as of, September 30,
2011, with the deduction of all approved expenditures in this meeting the balance is $309,522.78
and there is no reason we can’t complete fiscal year ending under the current budget.
NEW BUSINESS
Mrs. Lucido requested that the discussion from the previous meeting regarding benefit
improvements be discussed. E-mails regarding contributions increasing contributions and
college match continue to come in.
Mr. White stated that the PEERS (the Missouri state Plan comparable to NCERP) contributions
are at 6.63 per cent.
Mrs. Lucido stated that she contacted the non-unit classified employees for their opinions and 36
said yes to increasing contributions and only 3 said no.
Ms. Holtz stated that she has worked for the college for 30 years and the group has been asking
for an increase ever since she started working here. She stated that the Committee always says
they will look at the contributions increase but is never gets discussed. She stated she is nearing
retirement so there is not much benefit for her, but an increase would benefit the long-term value
of the Plan.
Mrs. Hupperts stated that increasing contributions would decrease the 5.12 per cent long term
deficit. Many companies who increase contributions do this because they are in “catch up” mode
and encouraged those who are also seeking to “catch up” as well look at increasing contributions.
Mr. O’Neil stated it appears that this is what needs to be done to meet the future obligations of
the Plan.
Ms. White stated that we would need to look at current retirees and those who will retire in the
next 10 year.
Mrs. Hupperts stated that she can run reports for a distribution population.
Ms. White said that we should also look at possible increases in health insurance and can people
afford both. Ms. Shaneberger stated that health insurance benefits could increase from 7-15 per
cent in the near future.
Mrs. Lucido stated that she is making a recommendation to seek an increase.
Mr. O’Neil stated at the last meeting we talked about the Plans security and retirement benefits
and comparing them to the state offered Plan. In that meeting Mr. Hayden stated he would look
into the other Plans. He asked Mr. Hayden if this had been accomplished.
Mr. Hayden stated that his efforts and focus were attending to the auditors and actuaries so their
reports could be completed as a previously mandated suspense’s dictated and the requested
research was not accomplished.
Mr. White suggested we take a close look at the PEERS Plan and will probably find that they are
under-funded.
Mr. Hayden stated that the NCERP Plan is fully funded.
Ms. Holtz reiterated that the Committee keeps saying that they are going to gather more
information and we will be in trouble in the future.
Mrs. Lucido asked Mr. Wibbenmeyer about the group he represents. Mr. Wibbenmeyer stated
that he did not take a formal survey but the consensus in conversation was “go for it.” We are
funded plus 25 years so why can’t we do this now? How far out is long term – 30 years ….50
years? Realistically we are funded on a long term basis. Historically we have been funded 9296 per cent, do we need to be 100 per cent funded?
Ms. White stated that jumping from 4 per cent to 6 per cent is a pretty big jump. The
recommendation from the report is 5.1 per cent. Is that too big? Would this be helpful for the
future?
Mrs. Hupperts stated in the volatile market an increase would benefit the Plan.
Mrs. Lucido stated that the NCERP Plan would need to be compared to similar Plan like PEERS
not PSRS. She stated that the Committee will set a meeting time to discuss prior to the February
meeting and gather facts and make a recommendation. She stated that this is a commitment to
look at the Plan and they will get the word out because a vote will be held at the February
meeting.
ADJOURNMENT
There being no further business, a motion was made by Ms. White and seconded by Mr. White to
adjourn the meeting. The motion carried and the meeting was adjourned at 10:28 a.m. The
meeting of the next NCERP Committee will take place on Wednesday, February 8, 2012 at 9:15
a.m., at the Cosand Center.
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Chairman
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Administrator
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