Pension Committee

MINUTES City of Murfreesboro Pension Committee April 10, 2019 The City of Murfreesboro Pension Committee met on Wednesday, April 10, 2019, at 8:00 a.m. in City Council Chambers at City Hall. The following members were in attendance: Earl Hull, Jr. Ronnie Martin Sgt. Sam Smith Erin Tucker, Vice Chair Scott Uselton Melissa Wright, Chair The following members were absent: Charlie Myatt Greg Sample Also present at this meeting were: Natalka Bukalo, President, Chartwell Consulting via telephone conference Michael Guyton, F.S.A., Consulting Actuary, Findley Beverly Alexander, HR Claims Specialist Chris McFarlane, HR Benefits Administrator, Recording Secretary Vice Chair Erin Tucker called the meeting to order at 8:07 a.m. and determined a quorum was present. Consider Minutes of February 13, 2019: Minutes of the February 13, 2019 meeting were presented for consideration. Mr. Hull made a motion that the minutes be approved as presented. Mr. Martin seconded the motion. (Chair Wright joined the meeting.) There being no further discussion, the motion passed by unanimous vote of the members present. Review of the March 31, 2019 Monthly Flash Report and any Rebalancing Recommendations for the Defined Benefit Pension Plan by Ms. Natalka Bukalo of Chartwell Consulting (Chartwell) via telephone conference: Ms. Bukalo presented the attached City of Murfreesboro Defined Benefit Pension Plan Flash Report dated March 31, 2019, which document is attached and incorporated as part of the Pension Committee Minutes of April 10, 2019. Pension Committee Meeting Minutes April 10, 2019 Page 2 of 4 Ms. Bukalo gave a brief overview of fund performance for the First Quarter of 2019. As of March 31, 2019, the Plan balance was $140.8 Million. Ms. Bukalo noted the Pension Committee adopted a new Strategic Asset Allocation Mix defined as 71% in equities (42% public equities / 29% private market equities) and 29% in public fixed income. Private market investments have not been identified at this time. Rebalancing recommendations are found on the March 31, 2019 Flash Report under the Proposed Rebalancing column and focus on moving the Plan towards the new asset mix. Full performance reports will be delivered in the near future. Ms. Bukalo opened the floor for questions on fund performance, asset allocation or rebalancing recommendations. No discussion. Chair Wright thanked Ms. Bukalo for her presentation to the Pension Committee. Michael Guyton, F.S.A. of Findley, to present the July 1, 2018 Annual Review of the Pension Plan: Chair Wright turned the meeting over to Mr. Michael Guyton of Findley for a presentation of the 2018 Annual Review of the Pension Plan: a. July 1, 2018 Actuarial Valuation and Report; and, b. GASB Statement No. 68 Actuarial Report for the reporting date June 30, 2018, which presentation materials were provided to all Pension Committee members and are incorporated as part of the Pension Committee minutes of April 10, 2019. Mr. Guyton referred all Committee members to the presentation material entitled City of Murfreesboro, Tennessee, Employees’ Revised Pension Plan July 1, 2018 Annual Review, which is also incorporated as part of the Pension Committee minutes of April 10, 2019. Mr. Guyton briefly reviewed the Agenda on Page 2 of the report. The funding method utilized by the Plan is the Entry Age Normal Funding Method with the Unfunded Accrued Liability amortized over 40 years starting in 2001, which provides a systematic approach to fund the Plan going forward. GASB uses this method as a basis for all reporting requirements. The investment return assumption was identified as 7.00% (updated in 2018). Pension Committee Meeting Minutes April 10, 2019 Page 3 of 4 The salary increase assumption utilized by the Plan since 2011 is four percent (4%) long term, which reflects inflation increases and promotions going forward. The Plan currently uses the RP2014 Combined Mortality Table with MP2017 Mortality Improvement (updated in 2018). Plan expenses are being paid from the Pension Trust Fund and are reflected in costs each year. The Water Resources Department contributes the same percentage of payroll into the Pension Trust Fund. The Asset Valuation Method is a five (5) year asset smoothing method which recognizes twenty percent (20%) of the gains and losses each year. This method avoids having contributions spike up and down as the market changes. As of July 1, 2018, the Plan had an unfunded accrued liability of $26,378,071 amortized over 40 years (with 23 years remaining) in the amount of $2,187,011. The City is currently funding the Plan during Budget Year 2018-2019 at 12.87% of payroll. The recommended Actuarially Determined Contribution Rate for Budget Year 2019-2020 is 16.33% of payroll. Total covered payroll is $34,129,880. Mr. Guyton noted the Plan was closed on June 30, 2010 and the number of Active Participants continues to go down. The number of Deferred Vested Annuitants and Retirees continues to increase. Mr. Guyton reviewed GASB 68 information found on Pages 16 through 25 of the report. GASB 68 was effective with the fiscal year ending June 30, 2015 and is intended to show the true assets and liabilities of the Plan on financial statements. Under GASB 68, the pension expense calculation is different from the Actuarially Determined Contribution (ADC) rate for funding purposes. The pension expense is based on the Entry Age Normal Funding Method. GASB 68 reporting date is June 30, 2018; however, the valuation date and measurement date is June 30, 2017. Mr. Guyton noted a correction to Page 18 of the Annual Report. Under the third column, the percentage should be 8.25% and not 6.25%. Mr. Guyton opened the floor for questions or comments. After a brief discussion regarding Social Security Normal Retirement Age and the trends of retirees for the City of Murfreesboro, Chair Wright thanked Mr. Guyton for his presentation. Pension Committee Meeting Minutes April 10, 2019 Page 4 of 4 Other Business: For Information Only: State of TN Public Employee Defined Benefit Financial Security Act of 2014 compliance letter dated April 5, 2019 reflecting overall funding status of the Plan at 86.40% is submitted to the Pension Committee, which document is incorporated as part of the Pension Committee minutes of April 10, 2019. There being no other business to come before the Pension Committee, the meeting was adjourned at 8:49 a.m.