NON-CERTIFIED EMPLOYEE RETIREMENT PLAN (NCERP)
COMMITTEE MEETING
August 10, 2011
MINUTES
CALL TO ORDER
Mrs. Vicki Lucido called the regular meeting of the NCERP Committee to order at 9:22 a.m. at
the Cosand Center – 5th Floor Large Boardroom.
Members Present
Others Present
Vicki Lucido, Chair
Ruth Lewis
Kevin White
Mike Wibbenmeyer, Vice Chair
Calla White
Bruce Vogelgesang
Kimberly Mueller
Donald Schisler (Towers Watson)
James Hayden, Plan Coordinator
Jim Wilkinson (Columbia Management)
Julie Hupperts (Towers Watson)
Christina Carpenter (State Street)
Tim O’Neil
Debbie Duane
Tammy O’Brien
Jo Moore
JoAnn Barban
John Dickey
Sheila Holloman
John Pahl
COMMENTS FROM PARTICIPANTS
None
APPROVAL OF MINUTES
Regular Meeting Minutes of May 11, 2011
Ms. Lewis moved that the minutes of the regular meeting of May 11, 2011 be approved as
written. Mr. White seconded the motion, and the motion carried.
ANNUAL STATE STREET BANK AND TRUST COMPANY’S FINANCIAL REPORT
Mrs. Carpenter opened her annual presentation by stating the market value of the NCERP
retirement fund has increased by 16.03 percent during the period of June 30, 2010 through June
30, 2011. However; the Plan’s market value has lost some ground in the last few weeks. She
also pointed out that some of the expenses for the 2011 fiscal year are greater this year due to
some expenses from the previous fiscal year being paid in fiscal year 2011.
Mr. O’Neil, Plan participant, asked where he could find the State Street Annual Trust Statement.
Mrs. Carpenter apologized that it was not included in the presentation booklet; she alluded to a
breakdown in internal communications, and said she would mail copies to Mr. Hayden to
distribute to those who would like to review the statement.
Mr. O’Neil then asked why the benefit payment expenses has increased 867.08 percent and the
legal fees had increased 1,637.64 percent. Mrs. Carpenter indicated that benefit payment fees
from previous years had not been paid due to computer upgrades and were taken out in 2011.
Mr. O’Neil asked how much should the fees be per quarter. Mrs. Carpenter responded with
“around $1,400.00.” Mr. Hayden stated that though the legal fees look like a large increase over
previous years, actually the need for legal counsel expenses in previous years were basically
non-existent, but last year legal counsel was utilized more often, and the cost totaled $1,485.68.
He also stated that these costs were incurred mostly from telephonic consultation with the
attorney. Although these expenses may seem absorbent, they are well within the budgeted
amounts.
INVESTORS’ REPORT
Columbia Management’s Investment Presentation as of June 30, 2011.
Mr. Wilkinson began his quarterly presentation by stating that the US economic concerns are far
greater than those of the Plan, at the moment. Leading up to date we had the 2007-2008 realestates down turn with poor lending practices and securities that were backed by the housing
market. He further reminded the committee that in 2009 the market got better with the stimulus
packages, however; in 2010 there were global concerns when the tsunami hit Japan and the
increase in market anxiety was caused by the PIIGS (Portugal/Ireland/Italy/Greece/Spain). Now
in 2011 there is a new frustration – our own congress failing to govern by inadequately raising
the debt ceiling. Mr. Wilkinson went on and stated that the economy in the first half of 2011
only grew 0.50 percent. We would need to increase jobs by 150,000 – 200,000 to decrease the
unemployment rate which remains stable around 9 percent and does not take into account those
businesses who are underemployed. Some people have given up looking for employment and
others who are currently working part-time but need full-time employment which has failed to
ignite the economy as needed. Mr. Wilkinson strongly believes that with patience we will get
through this and the Plan’s portfolio is set up to do so with 60 percent invested in equities and 40
percent invested in fixed income.
Mr. Wilkinson further explained that the one year return for the Plan is 23.26 percent but when
you look at the 3 year return 5.83 percent and the 5 year return is 5.56 percent, the Plan’s return
since inception is 9.29 percent, overall pretty good performance. He added that there is no need
to panic, patience is the key, and the US economy has had bumps over the years and has
managed to survive.
Ms. Holloman stated that she saw in the media that the US no longer has an AAA credit rating,
how does our monetary system now compare to that of other countries? Mr. Wilkinson stated
that this is a historic low for the US treasury. We have low yields and since the economy is not
moving interest rates are anticipated to be kept at 0 percent through 2013. He reiterated that the
decline in the economy has happened many times and will take some time to recover; we did not
get into this situation overnight, so the recovery will not take place overnight.
Mr. Vogelgesang asked if there is a cost for investment management transactions. Mr.
Wilkinson stated that the funds do not have fees associated with them; The Plan’s fees are based
upon the total asset value and charged on a quarterly basis.
Ms. Holloman stated, “If I retire and am earning $500.00 per month for my monthly benefit
pension, would this change?” Mr. Hayden stated that payments will always remain the same
unless there is a COLA increase and this would bring about an increase, not a decrease.
REPORT ON NEW PARTICIPANTS/RETIREES/RETURN OF
CONTRIBUTIONS/DECEASED RETIREES
Mr. Hayden reported that during the period of April 1, 2011 through June 30, 2011 fourteen (14)
new participants were added to the Plan and twelve (12) employees separated from the College.
The returned contributions and credited interest for those individuals leaving the Plan totaled
$40,093.89.
During the same period, six (6) Plan participants chose to retire. Two (2) chose the Annuity
Payments for Life Option and four (4) chose the Lump Sum Payment totaling $1,072,347.41.
Additionally, four (4) participants chose Deferred Vested Benefits to be held until they are
retirement eligible. There were two (2) retiree deaths 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 (April 1, 2011-June 30, 2011)
$16,500.00
Columbia Management Investment Svc (April 1, 2011 -June 30, 2011)
$34,933.00
Treat America – May 12, 2011
$75.00
State Street Bank and Trust Company (April 1, 2011-June 30, 2011)
$1,486.37
State Street Bank and Trust Company (April 1, 2011 - June 30, 2011)
$12,230.36
Lockton Companies LLC – Fiduciary Insurance (July 1, 2011– June 30, 2012) $3,841.00
Mr. Wibbenmeyer made a motion, seconded by Mr. White, to approve the payment of the one
(1) bill requiring approval presented to the committee during the reporting period. The motion
carried. The bill included was:
Human Resources Dept – Admin Charges (January 1, 2011- June 30, 2011) $37,013.54
UNFINISHED BUSINESS
Mr. Hayden stated that the credited interest of 0.3 percent has been updated for all the Plan
participants and statements’ indicating the increase has been distributed and was completed prior
to the previously projected completion date of July 31, 2011.
NCERP’s Operational Budget – Ending June 30, 2011 – James Hayden
The original budget for the 2010-2011 fiscal year was $393,175.00. As of, June 30, 2011, with
the approval of all bills, the balance remaining is $54,901.67. The Plan finished the year
$54,901.67 under budget.
Mr. Hayden stated that new budget for FY 2011-2012 of $398,431 was approved at the quarterly
committee meeting on May 11, 2011.
NCERP Report
Mr. Hayden stated that the lump sum calculator has been updated on-line so that each Plan
participant with computer access can now calculate an estimate of retirement benefits. The
updated benefit calculator can provide estimates for the 50 percent annuity/50 percent lump sum
option, the lump sum option, as well as the monthly annuity. He then thanked Mr. O’Neil for
bringing this idea forward at a previous NCERP quarterly committee meeting.
Mr. Hayden reported to the committee that the IRS has a pending levy on one of the retired
participant’s annuity payments. The Plan document does not accept any reassignments, but a
levy presented by the IRS will be discussed with the Plan’s attorney to determine the appropriate
course of action.
Mr. Hayden stated that the proposed COLA increase for all retirees who are eligible to receive a
COLA increase has been received from the actuary. The proposed increase is based on the CPIIndex, and is reported to be 3.64 percent and he thanked Mrs. Hupperts in her efforts in
providing the data.
NEW BUSINESS
Ms. Lucido stated that the committee would need to discuss a possible COLA increase for the
NCERP retirees effective January 1, 2012. Mrs. Hupperts from Towers Watson was introduced
to start the discussion.
Mrs. Hupperts stated that when evaluating the information from the United States Department of
Labor she reported the CPI-Index was up 3.6 percent. Since the 3.6 percent increase is less than
4 percent, the plan document does not provide for an automatic increase in benefits. Therefore,
the committee has to determine if they will move forward and make a recommendation to the
Board of Trustees (BOT) for approval of the 3.6 percent COLA increase, effective January 1,
2012. Mr. White asked if the committee can agree to increase the percentage by any amount as
long as it is less than 3.6 percent. The committee arrived at a con-census of “yes.” A small
discussion was held on the previous year’s COLA increases and how much the COLA was
increased at that time. On January 1, 2010, there was no COLA increase, and on January 1, 2011,
a 1.1 percent increase was implemented.
Mr. White made a motion to increase the COLA for qualifying retirees by 3.6 percent effective
January 1, 2012, Mr. Wibbenmeyer seconded the motion and the motion carried.
Mr. O’Neil asked how many retirees would be affected. Mr. Hayden stated that there are 159
retirees in the Plan, 63 are at the cap and 2 only receive partial increases, so approximately
ninety four minus those who are not eligible.
ELECTION CHAIRPERSON/VICE CHAIRPERSON
The committee accepted nominations for the election of a new Chair and Vice Chair.
Ms. Lewis nominated Mr. Lucido for the Chair nomination, Mr. White seconded the motion and
the motion carried.
Mr. White nominated Mr. Wibbenmeyer for the Vice Chair nomination, Ms. Lewis seconded the
motion and the motion carried.
QUESTIONS FROM A PARTICIPANT
Mrs. Lucido indicated a member she supports e-mailed her regarding an increase in the
percentage of contributions by the Plan participants and by the college. She further stated that
the PSRS Plan has had significant increases over the years and the NCERP Plan has not had any
causing a disparity between the two Plans and out of balance when equity was to be maintained
between the two groups. Mr. O’Neil asked if the Plan contributions could be increased to 5
percent. Mr. Schisler stated that he would not recommend a benefit increase at this time, even if
the contribution rate was increased to 5 percent, and that an increase in the contribution rate
would not necessarily result in an increase in benefits. The current contribution for the PSRS is
14.5 percent and NCEPR is 4 percent. Mr. Hayden pointed out that PSRS is not technically the
Plan that is comparable to NCERP but PEERS is and he doesn’t know what their contribution
rate is. Mr. Schisler further stated that the fund has lost approximately 5 million dollars since
2008. Ms. Lucido stated that we need to look at this from a long-term viewpoint and stated that
the Plan should review an increase since there has not been one in a long time. The question
arose as to why the Plan had not looked at increases during the “good years.” Mr. Hayden stated
that the acting director of Human Resources, Mr. Shaneberger has expressed that he doesn’t feel
the BOT would approve an increase due to the college’s current budgetary constraints. Ms.
Lucido suggested doing some research and fact gathering to come back to discuss later at the November 9, 2011 meeting. Then the committee can better determine if it would like to make a
recommendation to increase contributions to the BOT, after also reviewing the annual actuarial
report. Mr. Vogelgesang asked how well funded the Plan is. Mr. Schisler responded that it was
about 80 percent funded. This item was tabled until the November meeting.
ADJOURNMENT
There being no further business, a motion was made by Mr. Wibbenmeyer and seconded by Mr.
White to adjourn the meeting. The motion carried and the meeting was adjourned at 10:26 a.m.
The location of the next quarterly NCERP Committee will take place on Wednesday, November
9, 2011 at the Forest Park (pending construction) campus beginning at 9:15 a.m.
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Chairman
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Administrator
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