Employee Benefit Trust Minutes - 01/09/2008 CITY OF WICHITA FALLS
EMPLOYEE BENEFITS TRUST BOARD MEETING
January 9,2008
Present: Bill Sullivan, Chair
Darron Leiker, City Manager
Jim Dockery, Finance Director
Gail Garmon, Employee Benefits Coordinator
The meeting was called to order at 1:10 p. m.
Agenda Items:
Approval of Minutes
Jim Dockery made a motion to accept the minutes of the December 18, 2007 meeting.
Darron Leiker seconded the motion. Motion carried.
Meeting with Chris Solimine,ICMA
Chris Solimine,with ICMA Retirement Corporation was present to discuss ICMA's
Retiree Health Savings Plan program and the possible formation of a Trust between the
City and ICMA, for the purpose of funding the City's retiree liability in order to meet
GASB requirements.
Jim Dockery stated that the Board needed to set up a trust to meet GASB requirements
for funding the City's retiree liability, which the actuary had determined to be
approximately 2.5 million per year. He explained that after paying approximately two
million dollars per year for retiree health care expenses, the City would contribute the
additional $500,000 to the Trust. He farther stated that the actuary had suggested that an
irrevocable trust be established with a rate of return of at least 7% as one way of reducing
the liability. The money would be deposited into the account, drawing interest, and
would be used to pay the City's cost of retiree health care expenses.
Mr. Solimine explained ICMA's Trust program.
1. The Board could expect a rate of return of at least 8-8 1/2 %with
ICMA's program.
2. There are no up front fees charged to the City
3. Money in the Trust can be used for retiree health benefits only
4. The Trust is irrevocable. If there were ever a situation(i.e. a
government sponsored health care system) where the money was no
longer needed for retiree health benefits, the money would not be
available to the retiree
5. If the liability ever becomes fully funded, the money would revert
back to the City.
Jim Dockery summarized the process as:
Set up the trust
Decide on the changes to the retiree plan
Decide what the City's actual contribution to the fund will be
Notify actuary to finish the study
Mr. Solimine explained that setting up the Trust requires only that the City sign
customized documents provided by ICMA.
It was decided that Mr. Solimine would forward the customized documents to create the
Trust to Jim Dockery. It would then go before the City Council for approval. Jim
suggested, and Darron Leiker agreed, that the City probably would not start funding the
Trust until October, 2008. The City will choose the investment portfolio when the Trust
is created.
The Board then discussed the possibility of creating an RHS (retiree health savings plan)
with ICMA. This would be a program where future hires would contribute to the
program an amount to be determined, through payroll deduction. The City would then
match the contribution. The money would be for the purpose of paying health care
expenses for the retired employee and would eliminate the City keeping future retirees on
the health care program. The money in the account would replace retiree health care
coverage.
Mr. Solimine explained ICMA's RHS program.
1. The money goes into the account tax free and goes out tax free.
2. The money can be used for no other purpose than to pay for the retiree health
care expenses.
3. The program would be mandatory for all new hires (a hire date to be set by the
City)
4. There are no set up fees for the accounts.
Suggestions for putting money into the account:
1. Contributions could either be a flat dollar amount or a%of payroll(to be
decided by the City)
2. The City could require accumulated vacation pay and sick leave be deposited
into the account rather than being paid directly to the employee.
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Mr. Solimine explained that the City would need to define the benefit eligibility. He
gave several examples currently being used.
1. Separation from service with vesting
2. Retirement
3. Defined age
He further explained that when the employee becomes benefit eligible, there is a$7.50
quarterly fee to the retiree for administration of their account.
He further explained that the employer can change the plan at anytime. (i.e. 1%being
contributed to the account can be changed to 2%).
Mr. Solimine will forward the RHS package for consideration.
There being no other business, the meeting was adjourned at 3:15 p.m.
Respectfully submitted,
A.(1, llu )u---
Gail Garmon
Employee Benefits Coordinator