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THE AD

[00:00:01]

HOC COMMITTEE ON THE PENSION TO ORDER

[Ad Hoc Committee on Pensions on October 12, 2023. ]

FIRST ORDER OF BUSINESS IS, UH, MINUTES.

CAN WE GET A MOTION FOR THE MINUTES? SO MOVED.

SECOND.

SECOND.

GOT A MOTION TO SECOND.

ALL IN FAVOR SAY AYE.

AYE.

ANY OPPOSED? AYES CARRIED.

FIRST ITEM WE GOT ON THE BRIEFING IS THE EMPLOYEE'S RETIREMENT FUND OF THE CITY OF DALLAS, CHERYL AND DAVID HENDRICK.

WELL, GOOD AFTERNOON, UH, CHAIR, ATKINS AND COMMITTEE MEMBERS.

MY NAME IS CHERYL ALSTON AND I AM THE EXECUTIVE DIRECTOR OF THE EMPLOYEE'S RETIREMENT FUND, THE CITY OF DALLAS.

AND I'M JOINED TODAY BY DAVID ETHRIDGE, THE DEPUTY DIRECTOR FOR THE FUND.

OUR PRESENTATION TODAY WILL PROVIDE AN OVERVIEW OF THE DALLAS E R F AND WE ARE GONNA COVER THREE AREAS.

FIRST, WE'RE GONNA PROVIDE AN UPDATE ON THE CURRENT STATE OF THE FUND.

SECOND, WE'RE GONNA PROVIDE A HISTORICAL REVIEW OF THE CHANGES TO THE PLAN OVER THE LAST 20 YEARS.

AND THEN FINALLY, WE'RE GONNA PROVIDE AN OVERVIEW OF THE NEW REQUIREMENTS FOR THE FUNDING SOUNDNESS RESTORATION PLAN, AND THE STEPS TO MEET THOSE REQUIREMENTS.

ON THE FIRST SLIDE, OUR BACKGROUND IN HISTORY.

UH, THE EMPLOYEE'S RETIREMENT FUND WAS ESTABLISHED IN 1944 AS A DEFINED BENEFIT FUND FOR THE CIVILIAN EMPLOYEES.

NOW, AS YOU KNOW, THE FUND PROVIDES, UH, RETIREMENT BENEFITS AS WELL AS DISABILITY AND DEATH BENEFITS FOR OUR MEMBERS.

WE ARE COVERED BY A SEVEN MEMBER BOARD, WHICH I'M GONNA COVER IN DETAIL ON THE NEXT SLIDE.

UM, AS YOU KNOW, THE CITY OF DALLAS DOES NOT PARTICIPATE IN SOCIAL SECURITY.

UH, DALLAS, E R F DOES NOT HAVE AND HAS NEVER HAD A DROP PROGRAM.

AND OUR COST OF LIVING ADJUSTMENTS ARE BASED ON C P I AND WHAT'S IMPORTANT TO KNOW ABOUT OUR COLAS AS THEY'RE APPLIED TO THE BASE AMOUNT AND THEY'RE NOT COMPOUNDED.

NEXT SLIDE.

SO, A LITTLE BIT ABOUT THE GOVERNANCE FOR THE FUND.

UM, OUR SEVEN MEMBER BOARD HAS OVER 100 YEARS OF FINANCE AND INVESTMENT EXPERTISE.

THE COMPOSITION OF THE BOARD IS THE FOLLOWING.

THERE ARE THREE THAT ARE APPOINTED BY THE CITY COUNCIL AND, UH, HENRY VERA, WHO IS CURRENTLY CHAIR OF THE BOARD, DR.

JOHN PEEVY, WHO IS CURRENTLY VICE CHAIR OF THE BOARD.

AND DUPREE SCOBEL.

WE HAVE THREE ELECTED BY THE EMPLOYEES.

AND THE EMPLOYEES, VERY IMPORTANT TO NOTE, THEY MUST BE FROM DIFFERENT DEPARTMENTS.

SO IF WE HAVE SOMEONE FROM THE WATER DEPARTMENT, WE CAN'T.

THE SECOND AND THIRD CANNOT BE FROM THE WATER DEPARTMENT.

UH, THIS IS ONE OF THE FEW BOARDS THAT ACTUALLY THE MEMBERS ELECT REPRESENTATIVES.

UM, IT'S REALLY IMPORTANT 'CAUSE IN 2022, THE EMPLOYEES CONTRIBUTED OVER $63 MILLION.

SO THIS IS THEIR REPRESENTATION ON THE BOARD.

AND THE SEVENTH SEAT IS THE CITY AUDITOR THAT SERVES BY VIRTUE OF HIS POSITION AND IS IN HIS POSITION AS THE AUDITOR.

HE IS ONE APPOINTED BY THE COUNCIL, BUT IS ALSO AN EMPLOYEE.

SO WE, UH, AND THE TRUSTEES ARE CONSIDERED FIDUCIARIES OF FUND AND HAD THE SAME FIDUCIARY DUTIES.

UM, AS, AS YOU ARE FAMILIAR WITH NEXT SLIDE, THIS REALLY DEPICTS, UM, THE LONG-TERM HORIZON FOR THE FUND.

YOU'LL SEE THAT THE FUND WAS ESTABLISHED IN 1944.

AND OVER THAT TIMEFRAME, THE FUND HAS LASTED THROUGH SIGNIFICANT FINANCIAL EVENTS.

THREE WARS, GLOBAL FINANCIAL CRISIS, GLOBAL PANDEMIC.

UM, BUT IT REALLY WANTS, UH, THE SLIDE IS, UH, FOCUSING ON THE FACT THAT WE LOOK AT OUR PLAN FOR THE LONG TERM.

WE'RE LOOKING AT A 30 TO 50 YEAR HORIZON, UH, WHEN WE LOOK DO PLANNING FOR THE FUND.

NEXT SLIDE.

UH, I WANNA SPEND A MINUTE ON OUR INVESTMENT PORTFOLIO.

UH, THIS SLIDE SHOWS 27 YEARS OF INVESTMENT RETURNS FOR THE FUND.

UH, PLEASE NOTE THAT 15 OF THE 27 YEARS, WE'VE HAD DOUBLE DIGIT RETURNS.

17 OF THE 27 YEARS, WE EXCEEDED OUR ACTUAL RATE OF RETURN OF 7.25%, TWO 5%.

THE DOWN YEARS, YOU'LL SEE, WHICH YOU REMEMBER, 2000 TO 2002, THAT WAS THE TECH BUBBLE.

2008, WHICH WE ALL REMEMBER WAS A GREAT FINANCIAL RECESSION.

AND WHEN YOU THINK OF 2000, MORE RECENTLY, 2022, UM, DUE TO THE RISE IN INFLATION, THE STOCK HAD THE WORST, UM, PERIOD SINCE 2008.

AND SO JUST TO GIVE CONTEXT, WE WERE DOWN 8%.

THE S AND P 500 WAS DOWN 18%, AND THE NASDAQ WAS DOWN 33%.

SO IT JUST PROVIDES YOU CONTEXT, THE FACT THAT WE HAVE A DIVERSIFIED PORTFOLIO THAT HELPS WEATHER, UH, THE GOOD AND BAD TIMES.

NEXT SLIDE.

THIS IS A REAL PICK OF OUR, UM, PORTFOLIO.

WE DO HAVE A CONSERVATIVE DIVERSIFIED PORTFOLIO.

WE ARE ALSO VERY LIQUID.

WE HAVE 80% OF THE PORTFOLIO THAT IS NOT IN, UM, KIND OF LONG TERM LIKE PRIVATE EQUITY.

UM, SO IF WE HAD TO LIQUIDATE THE PORTFOLIO, UH, WE COULD DO IT PRETTY RELATIVELY QUICKLY.

OUR BOARD CONDUCTS AN ASSET ALLOCATION EVERY YEAR, AND THE PORTFOLIO IS NOW TILTED TO INFLATION, HEDGING

[00:05:01]

AND RISK REDUCTION.

THE BOARD REALLY WANTED TO TAKE SOME RISK OFF THE TABLE.

NEXT SLIDE.

HERE ARE SOME OF THE RESULTS.

SO FOR THE ONE YEAR, 7.16% THREE YEARS, 8.27%, 10 YEARS, 6.59.

AND SINCE INCEPTION, UH, 8.7% RETURN, UH, WE CURRENTLY HAVE $3.6 BILLION IN ASSETS UNDER MANAGEMENT.

UH, MOVING TO, FROM INVESTMENTS TO KIND OF THE ACTUARIAL SIDE OF THE HOUSE.

WE CONDUCT AN ACTUARIAL EVALUATION EVERY YEAR.

UH, AND WE ALSO CONDUCT AN EXPERIENCE STUDY EVERY FIVE YEARS.

SO WHAT'S AN EXPERIENCE STUDY? SO WHAT WE DO IS WE LOOK AT TWO CLASSES OF ACTUARIAL ASSUMPTIONS.

WE LOOK AT THE DEMOGRAPHIC ASSUMPTIONS, AND WE LOOK AT THE ECONOMIC ASSUMPTIONS, AND WE LOOK TO SEE WHAT DID WE ASSUME VERSUS WHAT REALLY HAPPENED.

AND BASED ON THAT ANALYSIS WITH THE ACTUARY, THE BOARD WILL MAKE ADJUSTMENTS TO THE ASSUMPTIONS.

IN ADDITION TO THAT, WE ALSO DO AN INDEPENDENT PEER REVIEW.

SO EVERY FIVE YEARS, WE ACTUALLY TAKE ALL OF OUR DATA, WE GIVE IT TO A COMPLETELY INDEPENDENT ACTUARY, THEY HAVE TO RUN IT THROUGH THEIR SYSTEM AND COME UP WITH THE SAME RESULTS.

AND THOSE ARE AS ALSO REVIEWED WITH THE BOARD AS WELL.

SLIDE EIGHT.

SO OUR LAST ACTUAL EVALUATION SUMMARY.

UH, WE LOOKED AT OBVIOUSLY THE LIABILITIES.

OUR, OUR, OUR CONTRIBUTION RATE.

UM, THE RESULTS WERE, OUR UNFUNDED LIABILITY WAS 1.4 BILLION.

OUR VALUE OF ASSETS 3.866, AND THE ACTUAL VARI LIABILITIES IS FIVE POINT, UM, TWO SEVEN.

SO OUR FUNDED RATIO IS 73% AS OF 2022.

NEXT SLIDE.

THIS GIVES A GLIMPSE OF OUR MEMBERS, OUR ACTIVE, RETIRED, RETIRED AND INACTIVE MEMBERS.

AND YOU'LL SEE THAT THE DALLAS, THE F SERVES 16,000 MEMBERS.

IT SHOWS A TREND IN ACTIVE RETIREE AND INACTIVE.

AND A REALLY IMPORTANT NOTE IS THAT THE AVERAGE RETIREMENT BENEFIT FOR A RETIREE IS $39,000.

SO IT'S, IT'S A REASONABLE BENEFIT.

AND, UM, SO THIS PART CONCLUDES KIND OF THE OVERVIEW OF THE CURRENT STATE OF THE FUND.

I'M GONNA MOVE NOW TO THE NEXT SLIDE, WHICH REALLY LOOKS AT THE HISTORICAL CHANGES THAT WE'VE MADE TO THE PLAN.

NEXT SLIDE.

WE'RE GONNA GO BACK TO 2004.

SO IN 2004, A STUDY COMMITTEE WAS FORMED, UM, AND THE STUDY COMMITTEE WAS CREATED BY, UH, THE COUNCIL.

AND IT CONSISTED OF MEMBERS FROM THE CITY STAFF, UH, E R F AND, AND ALSO OUTSIDE, UM, EXPERTS.

AND SO WE, THEY LOOKED AT EVERY SOLUTION, UM, EVERY POSSIBLE OPTION, UH, TO REDUCE THE UNFUNDED ACTUARIAL CRY LIABILITY.

AND WHAT THEY RECOMMENDED TO THE COUNCIL IN 2004 WAS THE FOLLOWING.

FIRST, THEY RECOMMENDED ISSUING PENSION OBLIGATION BONDS TO FULLY FUND THE UNFUNDED ACTUARIAL ACCRUED LIABILITY.

THEY ALSO, UH, BELIEVED IN THE, MAINTAINED THE CONTRIBUTION RATE.

SO 63% COMES FROM THE CITY AND 37% FROM THE EMPLOYEES.

THEY ALSO, UH, ADDED AN AUTOMATIC CONTRIBUTION RATE ADJUSTMENT.

SO, UH, TO THE PLAN, UH, ONE IMPORTANT NOTE IS THEY ALSO RECOMMENDED ADDING THE ANNUAL DEBT SERVICE PAYMENTS FOR THE PABS TO THE CITY'S REQUIRED CONTRIBUTION.

AND WE'LL SHOW, SHOW YOU HOW THAT LOOKS.

AND THEY ALSO RECOMMENDED CAPPING THE TOTAL CONTRIBUTION RATE AT 36%.

SO IF WE GO TO THE NEXT SLIDE, IT WALKS THROUGH AND I'LL WALK THROUGH THIS, WE'LL JUST FOCUS ON 2023.

SO THE PRIOR ADJUSTED TOTAL OBLIGATION RATE, WE TALKED ABOUT THE CAP AT 36%.

THAT'S WHERE THE CAP IS RIGHT NOW FOR, UH, LAST YEAR.

NOW, IF YOU LOOK AT THE ACTUARILY REQUIRED CONTRIBUTION RATE FOR THE FUND IS 35.5.

SO IT'S ACTUALLY LOWER THAN THE CAP.

NOW WE'VE MOVED TO THE DEBT SERVICE.

SO THE DEBT SERVICE, UH, PAYMENTS OF $40 MILLION.

WE RECEIVE A SCHEDULE FROM THE CITY OF WHAT THE DEBT SERVICE PAYMENTS ARE, AS WELL AS WHAT THE PROJECTED PAYROLL WILL BE.

WE TAKE THE, UH, DEBT SERVICE PAYMENT DIVIDED BY THE PAYROLL AND COME UP WITH A CREDIT RATE OF 8.22%.

SO IF YOU ADD THE 35.5 TO THE 8.2, YOU COME WITH A CURRENT TOTAL OBLIGATION RATE AT 43.72%.

SO THAT IS WHAT'S NEEDED FOR THE FUND.

BUT REMEMBER, IT'S KEPT AT 36%.

SO IF YOU LOOK AT THE CONTRIBUTION RATE SPLIT, THE EMPLOYEES ARE PAYING 13.32%.

THE CITY'S OBLIGATION IS 22.68%.

BUT REMEMBER, WE MINUS OUT THE 8.2% FOR THE BONDS.

SO WHAT'S ACTUALLY COMING TO THE FUND IS 14.46%.

SO THINK ABOUT IN 2022, THE EMPLOYEES CONTRIBUTED 63 MILLION, THE CITY CONTRIBUTED 67 MILLION.

NEXT SLIDE.

[00:10:01]

IF WE LOOK AT HOW, SO THE QUESTION, QUESTION, HOW DOES THIS COMPARE TO OTHER MAJOR CITIES THAT ARE IN TEXAS? UM, AND YOU CAN SEE, UM, WE LOOKED AT CONTRIBUTION TO THE RETIREMENT PLAN.

SOME CITIES, AUSTIN AND HOUSTON ALSO HAVE SOCIAL SECURITY.

AND THEN WE LOOK AT THE TOTAL CONTRIBUTION.

SO YOU'LL SEE THAT THE 22.68% IS, UM, THE LOWEST CONTRIBUTION FROM ALL THE MAJOR CITIES.

AND THAT'S INCLUDING THE, THE BOND PAYMENT AS WELL.

SO AUSTIN MUNI TOTAL IS 26.

UH, FORT WORTH IS AROUND 31.

AND THE CITY OF HOUSTON'S AT 35.

NEXT SLIDE.

SO, MR. CHAIR AND COUNCIL MEMBERS, WE'RE NOT GONNA CONTINUE THE HISTORICAL PERSPECTIVE OF THE FUND, AND WE'RE GONNA TALK TO YOU A LITTLE BIT MORE ABOUT HOW WE MANAGE THE FUND, WHAT FACTORS WE CONSIDER.

SO THE FIRST SLIDE THAT YOU SEE IS WHAT PENSION CONSULTANTS REFER TO AS THE SEESAW, UH, EFFECT, WHICH BASICALLY FORCES US TO LOOK AT, UH, ADDITIONAL LIABILITIES AND ALSO ASSETS, WHETHER THEY INCREASE OR DECREASE.

FOR THIS EXAMPLE, IN THIS ILLUSTRATION, WE'RE JUST GONNA REALLY TALK ABOUT ADDITIONAL LIABILITIES AND THE REDUCTION OF ASSETS.

SO WHEN YOU LOOK AT THE LEFT OF THE CHART, JUST A FEW EXAMPLES, YOU'LL SEE THAT LONGER LIFE EXPECTANCY ACTUALLY INCREASES LIABILITIES, BECAUSE THAT MEANS THE PENSION FUND HAS TO PAY OUT MORE FOR A LONGER PERIOD OF TIME.

WHEN YOU THINK ABOUT THE INFLATION RATES, IF THE ACTUARY HAS ASSUMED ONE RATE, UM, BUT THE FEDERAL GOVERNMENT HAS DECIDED TO INCREASE THAT RATE, THAT IS ANOTHER, ANOTHER POTENTIAL LIABILITY THAT WE HAVE TO MANAGE AS AN INCREASE.

UM, THE OTHER ONE IS, IT'S A LITTLE BIT UNIQUE BECAUSE SOMETIMES, UH, IT'S A LITTLE BIT CONFUSING.

BUT IF YOU THINK ABOUT THE RATE OF RETURN, YOU KNOW, YOU THINK ABOUT THE RATE OF RETURN AND WHAT'S EXPECTED IN THIS EXAMPLE, A 8.5% RATE OF RETURN, IF IT'S REDUCED, AND THIS EXAMPLE, THE 7.25%, IT ACTUALLY INCREASES LIABILITIES BECAUSE THE ASSUMPTION IS WE CAN ONLY EARN AT 7.25% NO LONGER AT THE 8.5.

SO WE STUDY THESE FACTORS ON LIABILITIES ON THE ASSET SIDE.

UH, AND I'M REALLY WALKING YOU THROUGH THIS BECAUSE THE EXAMPLES THAT ARE FORTHCOMING, UH, YOU'RE GONNA HEAR SOME OF THEM AS IT RELATES TO, UH, WHAT WE DO WITH THIS, UH, SEESAW EFFECT.

WHEN WE THINK ABOUT THE PLAN TO HAVE A RATE OF RETURN, IF THE PERFORMANCE COMES IN LESS THAN THAT ACTUALLY REDUCES THE ASSETS.

BUT ONE OF THE MOST IMPORTANT, UH, FACTORS THAT WE HAVE TO CONSIDER IN OUR ASSETS IS WHAT, UH, YOU'RE GONNA REALLY HEAR US TALK ABOUT.

AND THAT IS THE CONTRIBUTION MADE RELATED TO PAYROLL.

IF THAT REDUCES, THAT CERTAINLY IS A WAY TO REDUCE, UH, THE FUND'S ACCESS ACCESS.

ON THE NEXT SLIDE, THIS SLIDE REALLY TALKS ABOUT ANOTHER FACTOR.

UH, WE TALKED ABOUT LIFE EXPECTANCY, BUT WE WANTED TO GIVE YOU SOME STATISTICS ON, UH, LIFE EXPECTANCY.

IN 2015, E R F RECEIVED NOTICE FROM THE ACTUARY THAT WE REALLY NEEDED TO STUDY LIFE EXPECTANCY.

IF YOU LOOK AT THIS CHART, YOU'LL SEE THAT THERE'S A LINE FOR FEMALES AND A LINE FOR MEN.

UH, THE FEMALES IN, IN 1960, FOR EXAMPLE, WERE LIVING 15.8 YEARS BEYOND THE AGE OF 65.

LIKEWISE, MEN WERE LIVING 13 YEARS BEYOND THE AGE OF 65.

BUT IF WE FAST FORWARD TO 2010, WE'LL SEE THAT THE LIFE EXPECTANCY FOR WOMEN INCREASED BY 22%, UH, WITH THE 20.3 YEARS OF, UH, OF AGE.

AND THEN FOR MEN, 17.7 YEARS, THAT IS A SIGNIFICANT GROWTH.

OVER TIME, WE, WE KNOW THAT IT'S SEVERAL DECADES.

WE, IT'S A FACTOR THAT THE FUND HAD TO MANAGE.

SO LET'S LOOK AT SOME OF THE STATISTICS FOR THE EMPLOYEE'S RETIREMENT FUND.

ON THE NEXT SLIDE, YOU'LL SEE THAT THE OLDEST EMPLOYEE WAS, IS BORN, OR WAS BORN IN 1939, STILL WORKS FOR THE CITY OF DALLAS AT THE AGE OF 83, LIVING LONGER, WORKING LONGER.

UH, THE YOUNGEST EMPLOYEE WAS BORN IN 2004, BUT THE OLDEST RETIREE WAS BORN IN 1922.

AND THAT PARTICULAR PERSON IS 100 YEARS OLD.

NOW, YOU MAY SAY, WELL, THESE ARE ANOMALIES TO US.

THESE ARE INDICATORS THAT WE REALLY HAVE TO GOVERN, AND THEY BECOME THE FACTORS THAT HELP US TO MANAGE BETTER.

UH, JUST TO HIGHLIGHT A FEW MORE, THE OLDEST BENEFICIARY WAS BORN IN 1914 AT A HUNDRED, UH, AND EIGHT YEARS OF AGE.

UH, AND THAT THE 18 RETIREES HAVE BEEN IN PAYMENT STATUS FOR MORE THAN 40 YEARS.

AND THE OTHER THING THAT WE LOOK AT IS THE SECOND TO THE LAST BULLET.

RIGHT NOW WE HAVE 1100 EMPLOYEES APPROXIMATELY, WHO ARE ELIGIBLE TO RETIRE.

SO WE LOOK AT ALL THESE FACTORS TO GOVERN, UH, AND TO BETTER UNDERSTAND.

SO ON THE NEXT SLIDE, WHAT WE WANNA SHARE WITH YOU IS WHAT THE FUNDING SOUNDING RESTORATION PLAN REQUIREMENTS REALLY ARE, AND WHAT DOES IT MEAN, AND THEN WHAT DOES IT MEAN TO THE FUND.

IN 2015, THE TEXAS, UH, LEGISLATORS

[00:15:01]

DECIDED TO IMPLEMENT A NEW BILL THAT REQUIRED ALL PENSION FUNDS TO BASICALLY LOOK AT, QUITE FRANKLY, A 30 YEAR AMORTIZATION REGARDLESS OF THE CAUSE.

AND THAT IF THE PENSION PLANS DID NOT MEET THAT EXPECTANCY OVER A THREE VALUATION YEAR PERIOD, THAT A PLAN HAD TO BE PUT IN PLACE.

AND THUS, THE FUNDING SIGNED THIS RESTORATION PLAN.

SO WHAT DID E R F DO? 2015 U R F DID A NUMBER OF THINGS, BUT FIRST THEY ADOPTED A MORE CONSERVATIVE, UH, SET OF ASSUMPTIONS LOWERING THE ACTUARIAL RATE OF RETURN FROM 8% TO 7.75%.

UH, THEY ADOPTED A NEW, WE ADOPTED A NEW MORTALITY TABLE CALLED GENERATIONAL MORTALITY RECOMMENDED BY THE SOCIETY OF ACTUARIES.

TIED BACK TO THE SLIDE PREVIOUSLY MENTIONED.

AND THEN, UH, WE ALSO LOOKED AT A STRATEGY GOING FORWARD ON THE NEXT SLIDE.

AND WHAT YOU WILL SEE IS, UH, THE BOARD, THE E R F BOARD, DECIDED TO ESTABLISH A PENSION PLAN STUDY GROUP.

THE PURPOSE OF THIS PENSION PLAN STUDY GROUP WAS TO LOOK AND EVALUATE VARIOUS SCENARIOS TO DETERMINE HOW WE COULD ACTUALLY REDUCE THE OVERALL LIABILITY OVER TIME.

SO I WON'T GO THROUGH THE FIVE THINGS WE DID, BUT I WILL JUST HIGHLIGHT, WE LOOKED AT THE AGE OF 65 AND BEYOND USING ACTUARIAL BASED DATA.

UH, WE LOOKED AT SEVERAL SCENARIOS.

I THINK AT THE TIME WE HAD APPROXIMATELY 67 DIFFERENT SCENARIOS THAT OUR ACTUARY ACTUARY, UH, WALKED US THROUGH, UH, WITH THE HOPES THAT WE COULD REDUCE LIABILITY.

UM, AND WE DID A STATEWIDE COMPARISON, UH, SIMILAR TO WHAT YOU HEARD CHERYLL MENTION EARLIER.

SO BASED ON THE STUDY, UH, THE, THE COMMITTEE ESTABLISHED RECOMMENDATIONS PRESENTED TO THE BOARD, PRESENTED TO THE COUNCIL, AND AS A RESULT, DETERMINED THAT ESTABLISHING ANOTHER TIER OF BENEFITS WOULD HELP REDUCE THE LIABILITY OVER TIME.

AND SO YOU'RE GONNA HEAR ABOUT TWO DIFFERENT TIERS OF BENEFITS.

ONE IS TIER A AND ONE IS TIER, ONE IS TIER B, BUT THE MAIN FOCUS WAS TO REDUCE NORMAL COSTS AND ALSO TO BASICALLY FIND SAVINGS.

AND THE PROJECTED SAVINGS WAS $2.15 BILLION OVER A 30 YEAR PERIOD.

SO WITHIN, UH, THE TRUST PLAN DOCUMENT THAT THE E R F BOARD MANAGES, UH, WHICH IS DALLAS CITY CODE CHAPTER 40 A, UH, CHAPTER 48 35, REQUIRES THAT THERE BE A THREE STEP PROCESS TO AMEND THE PLAN.

THE PROCESS, UH, INCLUDES THE E R F BOARD, THE CITY COUNCIL, AND THEN THE VOTERS AT LARGE.

AND SO THAT'S WHAT HAPPENED IN 2016.

UH, THE RECOMMENDATIONS WERE BROUGHT, UH, TO THE BOARD AGAIN, AND THEN OF COURSE, TO THE CITY COUNCIL.

IN AUGUST OF 2016, UH, THE BOARD AND COUNCIL AGREED UPON THIS NEW RECOMMENDED TIER, AND IT WAS SENT TO THE VOTERS IN NOVEMBER OF THAT SAME YEAR.

THE VOTERS VOTED 69% IN FAVOR OF THIS CHANGE.

AND AS A RESULT, JANUARY ONE, UH, 2017 FOR ALL NEW HIRES AT THAT TIME, THEY WERE TO, UH, ACCEPT THIS CONDITION OF EMPLOYMENT FOR TIER B AS WE KNOW IT TODAY.

SO ON THE NEXT SLIDE, YOU'LL SEE THE COMPARISON OF THE TWO TIERS, AND THAT'S ON SLIDE 20.

UH, THE, BASICALLY THE SLIDE, BASICALLY WE'LL SHARE WITH YOU THAT TIER A, UM, HAS A NUMBER OF FACTORS DIFFERENT FROM TIER B.

I'M JUST GONNA HIGHLIGHT A FEW.

WE KNOW THAT THE DATE OF THE EFFECT WAS ALL EMPLOYEES WORKING BEFORE DECEMBER 31ST, 2016, PARTICIPATED IN TIER A.

ALL OF THOSE AFTER TIER B, THE CHANGES, JUST TO GIVE YOU THREE OR FOUR, THE MULTIPLIER IN TIER A IS 2.75%, WHEREAS THE MULTIPLIER NOW IN TIER B IS 2.5%.

THE NORMAL RETIREMENT AGE, WHICH IS TRADITIONALLY AGED 60 INCREASE FOR TIER B TO AGE 65 WITH A GUARANTEED FIVE YEARS OF SERVICE.

AND THEN THE, UH, SERVICE RETIREMENT MOVED FROM 30 YEARS OF SERVICE TO 40, I'M SORRY, I'M SORRY, EXCUSE ME.

NORMAL RETIREMENT MOVED FROM AGE 60 TO 65, AND THEN THE SERVICE RE RETIREMENT MOVED FROM 30 YEARS TO 40 YEARS.

SO THESE ARE THE CHANGES THAT WE RECOMMENDED TO THE BOARD AND TO THE COUNCIL.

AND YOU CAN SEE THAT THE BALANCE OF THEM ARE THERE, BUT I IMAGINE THE BIG QUESTION IS WAS, WELL, WHAT WAS THE FORECAST AS MENTIONED? AND HOW DID YOU REALLY MEASURE THAT FORECAST? SO ON THE NEXT SLIDE, YOU'LL SEE THE ORIGINAL FORECASTED CHART.

AND THE CHART, AS YOU CAN SEE, WAS ON SLIDE 21, WAS TO REVIEW A 30 YEAR PLAN.

MAY WANNA MOVE TO SLIDE 21.

THANK YOU.

UM, A A 30 YEAR PLAN.

AND THE 30 YEAR PLAN SAYS, AS TIER A MEMBERS RETIRE AND TIER B MEMBERS INCREASE, THUS

[00:20:01]

THE SAVINGS.

AND SO THE FORECAST WAS A $2.15 BILLION SAVINGS.

AND SO I'M SURE YOUR, YOUR QUESTION IS, WELL, DID IT WORK? IF YOU SEE ON THIS CHART, IF YOU LOOK AT BY THE SEVENTH YEAR, YOU'LL SEE THAT THE BLUE LINE, WHICH REPRESENTS TIER A AND THE PINK LINE REPRESENTS TIER B, BUT THE MOST IMPORTANT LINE IS THE GREEN LINE, AND THAT'S THE TIER A MEMBERS ROLLING OFF OF THE PLAN.

THE BLUE LINE REMAINING REPRESENTS THE SAVINGS, THE DIFFERENCE BETWEEN THE COST OF TIER B AND THE COST OF TIER A BASED ON THE ROLL OFF OF MEMBERS.

SO THE NEXT SLIDE ON SLIDE, UH, 22, UM, WE CAN SEE NOW WHERE ARE WE AS OF, UH, CALENDAR YEAR 2022 ON SLIDE 22.

OKAY.

OKAY.

WELL, I'LL, I'LL SLOW DOWN AND WAIT FOR THE DELAY.

THANK YOU.

UH, SO ON SLIDE 22, WHAT YOU'LL SEE IS, UM, IN 2022, YOU'LL SEE AS OF DECEMBER 31ST, 2022, TIER A MEMBERS ARE AT 52% OF THE MEMBERSHIP, AND TIER B MEMBERS ARE AT 48%.

SO THE HIRING RATE, THE CONDITION OF EMPLOYMENT FOR EVERYONE HIRED JANUARY 1ST, 2017 AND BEYOND, IT ACTUALLY HAS MATRICULATED THIS GOAL.

AND YES, THE PLAN IS WORKING OVER TIME, BUT IT DOES TAKE 30 YEARS TO SEE THE SAVINGS.

AND SO THAT'S THE POINT WE REALLY WANTED TO BRING TO YOUR ATTENTION.

SO ON SLIDE 23, HERE ARE THE NUMBERS THAT REALLY PROVE THAT THE SAVINGS ARE OCCURRING BASED ON LOOKING AT THE REDUCTION OF THE NORMAL COST.

IF YOU LOOK AT THIS CHART, UH, WHEN WE GET TO IT ON SLIDE 23, WHAT YOU'RE GONNA SEE IS THAT THE NORMAL COST ACTUALLY HAS REDUCED SINCE TIER B HAS BEEN PUT IN PLACE.

THE ONLY EXCEPTION WAS WHEN THE BOARD ELECTED TO ACTUALLY REDUCE ITS RATE OF RETURN.

REMEMBER, ON THAT SEESAW, THE RATE OF RETURN HAS ACTUALLY DECREASED.

THE LIABILITIES INCREASED FOR THE ONE YEAR.

YOU'LL SEE THAT IN 2020, REALLY STARTING IN 2019, THE ASSUMPTION DROVE THE NORMAL COST FROM 19.5, THE PREVIOUS 19.56, THE PREVIOUS YEAR, 19, UH, TWO 20.5 IN 2020.

SO THE PLAN, UH, THAT WAS ESTABLISHED IN 2016 IS STILL IN PLAY.

IT'S STILL WORKING.

UM, BUT WE'RE STILL WORKING THROUGH A 30 YEAR PERIOD AND WE'RE IN THE SEVENTH YEAR.

AND SO WITH THAT, I'M GONNA TURN IT BACK TO CHERYL TO TALK ABOUT WHERE WE ARE NOW.

ALL RIGHT, NEXT SLIDE PLEASE.

SO WE'RE GONNA MOVE TO THE THIRD AND FINAL PART OF THE PRESENTATION, WHICH REVIEWS THE STATE REQUIREMENTS AND THE PLAN TO MEET THOSE REQUIREMENTS.

SO IN 2023, THE P R B ISSUED GUIDELINES AROUND, UH, THE, WHAT WE CALL THE F SS R P REQUIREMENTS.

AND SO WITH THAT, UM, WHAT OUR GOAL IS IS, UH, FUNDING PERIOD, UM, BETWEEN 30 TO 40 YEARS, UH, WE RECEIVED A LETTER THAT WE ARE PART OF THE EXCEPTION, AND I THINK IT IS PART BECAUSE WE DID, WE'RE PROACTIVE IN DOING THE TIER B.

UM, SO, UH, THE GOAL IS TO GET TO AN F S R P BEFORE SEPTEMBER 1ST, 2025, AND WE WOULD REMAIN ELIGIBLE FOR THAT EXCEPTION FOR THE 30 YEAR, UM, PERIOD IF WE, IF IT HAPPENS AFTER SEPTEMBER 1ST, 2025.

NOW ALL PENSION PLANS HAVE TO ADHERE TO A 25 YEAR, WHICH IS A HIGHER BAR AMORTIZATION PERIOD.

SO WE REALLY WANNA MAKE SURE WE HIT THAT DEADLINE.

NEXT SLIDE.

SO WHEN WE TALK ABOUT, YOU KNOW, UH, UH, DAVID REVIEWED THE SEVERAL LEVERS.

AND SO WHEN YOU LOOKED AT IT, THE INVESTMENTS ARE GOOD.

I MEAN, THE INVESTMENT RESULTS ARE GOOD OVER TIME.

OUR LIABILITIES, THE FUND IMPLEMENTED A TIER B THAT REDUCES THE FUTURE LIABILITIES.

AND WE ARE IN YEAR SEVEN OF THE 30 YEAR PLAN, BUT WE CAN SEE THAT IT'S WORKING BECAUSE THE NORMAL COST IS GOING DOWN.

SO LET'S LOOK AT THE CONTRIBUTIONS WE HAVE SHOWN THE CITY'S CONTRIBUTIONS OF, OF ABOUT 14.46 THAT ARE GOING INTO THE PLAN.

UH, UH, BUT WHAT ABOUT FOR THE MEMBERS' CONTRIBUTIONS? SO THE PERCENTAGE OF THE MEMBERS' CONTRIBUTIONS HAS STAYED CONSTANT, BUT THE NUMBER OF ACTIVE MEMBERS HAS DECLINED.

SO IF YOU LOOK AT 2008, RIGHT BEFORE THE GREAT FINANCIAL FINANCIAL RECESSION, UH, THE CITY HAD 8,371 EMPLOYEES.

WHEN YOU LOOK AT THE GOING TOWARD 2011, WE HAD NEARLY A 19% DROP IN EMPLOYEES, OVER 1600 EMPLOYEES, UM, UH, LESS FOR THE, UH, FOR THE ORGANIZATION FOR THE CITY.

AND SO WHEN YOU LOOK AT IT, IN ADDITION TO THAT WORKFORCE REDUCTION, UH, FOR THE PEOPLE THAT WERE HERE, THEY'LL REMEMBER FURLOUGH DAYS.

THERE WERE DAYS THAT THAT, UM, UH, ACTIVE EMPLOYEES DID NOT GET PAID.

UM, AS WELL AS WE REDUCED, UM, PAY CHANGES, MERIT INCREASES AS WELL.

SO THAT WERE, THERE WAS A FURLOUGH, I GUESS OUR, OUR HALT ON MERIT INCREASES.

AND SO WHEN YOU LOOK AT IT OVER TIME, IF YOU FAST FORWARD TO 2022, WE'RE STILL BELOW

[00:25:01]

THE LEVEL OR OF EMPLOYEES THAT WE HAD IN 2003.

SO WHEN YOU LOOK AT THE NEXT SLIDE, SO WHAT WAS THE IMPACT OF THAT? LESS MEMBERS, UM, LESS MEMBERS CONTRIBUTING.

UM, THE CITY'S NOT CONTRIBUTING FOR THE MEMBERS AS WELL.

SO WHEN YOU LOOK AT THE ACTUAL, UH, VERSUS PROJECTED PAYROLL GROWTH, YOU'LL SEE THAT THE PROJECTED WAS THE GREEN LINE.

THE RED LINE IS WHAT WE ACTUALLY RECEIVED OR WHAT THE ACTUAL PAYROLL GROWTH WAS.

AND YOU CAN SEE THE DROP THAT HAPPENED AFTER 2008.

UH, WE DID A CALCULATION TO SEE WHAT THE CUMULATIVE EFFECT OF THAT WAS, AND IT WAS ESSENTIALLY 1.3 BILLION LESS IN PAYROLL GROWTH FROM 2008 TO 2022.

SO WITH THAT, LESS CONTRIBUTIONS COMING INTO THE FUND FROM A REDUCED NUMBER OF ACTIVE EMPLOYEES.

NEXT SLIDE.

SO WHEN WE LOOK AT, UM, SLIDE 27 AND WHAT ARE WE DOING NOW TO MEET THE REQUIREMENTS? SO WE HAVE FORMED A STUDY GROUP, UH, CONSISTING OF EMPLOYEES OF, OF MEMBERS FROM THE CITY STAFF, AS WELL AS FROM THE EMPLOYEE'S RETIREMENT FUND.

UM, WHAT IS OUR SCOPE OF WORK? WE'RE GONNA LOOK AT ALL THE DIFFERENT OPTIONS IN ORDER TO MEET A 30 TO 40 FUNDING PERIOD.

UM, WE REALIZE THAT EMPLOYEES ARE CONTRIBUTING TO THE SUSTAINABILITY OF THE FUND.

UM, UH, RIGHT NOW WE'RE LOOKING AT ALL OPTIONS.

WE REALIZED, UM, OUR VIEW IS THE CURRENT MARKET FOR PENSION OBLIGATION BONDS IS UNATTRACTIVE DUE TO THE HIGH INTEREST RATES.

UH, SO WE ARE, THAT'S SOMETHING THAT THE BOARD IS NOT LOOKING FOR AT THIS TIME, BUT WE BELIEVE THAT THERE ARE OTHER OPTIONS FOR US TO HELP ACHIEVE THAT GOAL.

SO THE STUDY GROUP DID MEET IN AN ALL GIRL MEETING.

WE ARE MEETING PERIODICALLY AND OUR GOAL IS TO, UH, COME BACK TO THIS COMMITTEE WITH, UM, SEVERAL OPTIONS, NOT JUST ONE, SEVERAL OPTIONS TO MAKE SURE THAT, UH, FOR YOU TO REVIEW, UM, UH, FOR, UH, WHAT WOULD BE A SOLUTION FOR US.

NEXT.

ONE OF THE QUESTIONS YOU MAY ASK IS EXACTLY HOW MUCH, UM, DOES THE FUND NEED? AND SO, UH, WHAT'S REALLY IMPORTANT IS WHEN YOU LOOK AT THE UNFUNDED ACTUARIAL ACCRUED LIABILITY, IT SAYS 1.4 BILLION, BUT THAT'S TO GET TO A HUNDRED PERCENT FUNDING.

RIGHT NOW, THE REQUIREMENT DOES NOT, UH, THE F SS R P REQUIREMENT IS NOT THAT IT IS TO GET TO A FUNDING PERIOD, UH, FOR 30 YEARS TO GET TO A HUNDRED PERCENT.

SO THE AMOUNT THAT WE NEED IS ACTUALLY LESS.

SO WHEN YOU LOOK AT IT FROM AN ANNUAL PERSPECTIVE, OUR, UH, IT'S AROUND 24 MILLION A YEAR, OR THERE WAS A LUMP SUM CONTRIBUTION OF 371 MILLION.

SO IT'S NOT A, UH, IT'S NOT THE 1.4 BILLION.

I WANNA MAKE SURE THAT IT'S VERY, VERY CLEAR THAT IT'S, IT'S A, UH, WE'RE GETTING TO A 30 YEAR FUNDING.

UH, AND ALSO REMEMBER IN 10 YEARS THE BONDS ROLL OFF RIGHT IN 2034, THAT'S AN ADDITIONAL 8% INTO THE FUND.

THE OTHER PART ON THE LIABILITY SIDE, WITH THE REDUCTION IN OUR NORMAL COST, THE LIABILITIES WILL GROW AT A SLOWER PACE.

ALL OF THAT COMBINED, UH, REQUIRES FOR US TO HAVE LESS, YOU KNOW, A LESSER CONTRIBUTION INTO THE FUND.

UM, THE OTHER REQUIREMENT, IN ORDER TO MAKE IT A LONG-TERM SOLUTION, WAS TO, TO REMOVE THE 36% CAP AND LET THE CONTRIBUTIONS ADJUST AS NEEDED, BUT IT ADJUSTS FOR BOTH THE EMPLOYEES AND THE EMPLOYER.

SO THOSE JUST ONE OF THE POTENTIAL OPTIONS, BUT WE WILL BRING BACK A SERIES OF OPTIONS TO YOU.

SO IN CONCLUSION, I JUST WANTED TO SAY THE INVESTMENT PROGRAM, UM, IS CONSERVATIVE AND DIVERSIFIED AND, UH, APPROPRIATE.

OUR PAYROLL CONTRIBUTIONS ARE LOWERED, UH, DUE TO THE DECREASE IN ACTIVE EMPLOYEES.

UM, IN 2004, THE PBS WORK TO INCREASE ASSETS TO LOWER THE CITY'S CONTRIBUTION.

THE, UH, PBS WERE ISSUED AT A 5.41% RATE.

WE HAVE EARNED WAY OVER THAT.

UM, SO WE'VE EARNED SIX TO 7%.

SO WE'VE, UH, EXCEEDED THAT.

UM, IN 2016, THE BOARD, THE COUNCIL AND THE VOTERS WERE PROACTIVE IN ADOPTING A TIER B BEFORE WE NEEDED, UM, WE'RE REQUIRED TO DO THAT.

UM, THE 2021 STATE LEGISLATURE KIND OF MOVED THE GOALPOST, SO WE'RE HAVING TO DO THIS AT THIS PERIOD OF TIME, WHICH, UM, AND THEN BASED ON THE CURRENT INTEREST RATE ENVIRONMENT, E R F IS NOT REQUESTING ANY ADDITIONAL PENSION OBLIGATION BONDS.

AND THEN, UM, THE STUDY GROUP IS GOING TO COME BACK TO YOU WITH OPTIONS THAT WILL COMPLY WITH THE REQUIREMENTS THAT WILL MEET THE 9 1 25 DEADLINES, SO THAT WE CAN STAY WITHIN THE 30 TO 40 YEAR EXCEPTION.

AND SO WITH THAT WILL CONCLUDE OUR PRESENTATION AND, AND SEE IF, UH, IF YOU HAVE ANY QUESTIONS.

THANK YOU.

VERY, THANK YOU VERY MUCH MUCH FOR THE PRESENTATION.

UH, MR. RA, THANK YOU FOR YOUR SECOND GO AROUND.

I MISS YOU FOR MANY, MANY YEARS.

AND THANK YOU, ASHLEY, FOR THE, THE GREAT BRIEFING, THE GREAT, UH, INFORMATION COLLEAGUES.

UH, WHAT WE'RE GONNA DO A LITTLE BIT DIFFERENT, UH, I KNOW THERE'S A WHOLE LOT OF QUESTIONS Y'ALL WANT TO ADDRESS.

WHAT I'M GONNA DO, LET EVERYONE

[00:30:01]

DO TWO QUESTION, GET THOSE TWO QUESTION ROTATE AND COME BACK INSTEAD OF SOMEONE DOING FOUR OR FIVE SUCCESS QUESTIONS AT ONE TIME.

SO I'M, START IT WITH YOU ON MY RIGHT, PAULA.

OKAY.

UM, THANK YOU.

GOOD TO SEE YOU GUYS AGAIN.

SO, CAN YOU TELL ME, WHEN DID WE PUT IN, AND MAYBE YOU TALKED ABOUT THIS, WHEN DID THE POVS ACTUALLY HIT ON THIS LONG-TERM DALLAS? UH, I GUESS ON NUMBER FIVE, LIKE WHEN DID WE SEE THE INFUSION OF EXTRA CASH? THE PENSION OBLIGATION BONDS WERE ISSUED IN 2005, EARLY FIRST QUARTER OF 2005.

OKAY.

AND THEN WE HIT THE DOWN, THEN IT, THEN 2008 HIT 2008 HIT, BUT THEN THAT THOUSAND NINE, WE WERE 80 GAINS AT THAT POINT.

SAY IT AGAIN.

GO AHEAD.

GO AHEAD, SIR.

CHERYL, I'M SORRY.

NO, I SAID IN 2009 WE WERE UP 31%.

OKAY.

SO IT, IT, WE, I'LL TRY BACK.

OKAY.

SO WE HIT, OKAY.

SO IN 2004, FIVE PBS HIT THE, THE, THE ASSET ON THE BALANCE SHEET, CORRECT? 2005, YES.

AND THEN IT, UH, AND THEN WE HAD, I'VE SEEN ALL OF THE, KIND OF THE ERRATIC AND THEN THE VOTERS VOTED IN WHAT YEAR? THE VOTE, 2000? GO AHEAD.

2016.

2016.

AND THEN THAT'S WHEN WE CHANGED THE TIER PLAN, CORRECT.

ALRIGHT, THAT'S MY QUESTION.

SORRY.

I'LL COME BACK.

IT'S JUST, JUST TO BE FACTUAL, THE TIER PLAN STARTED JANUARY 1ST, 2017, BUT THE ACTUAL VOTING TOOK PLACE IN NOVEMBER OF THE PREVIOUS YEAR.

OKAY.

THANK YOU.

THAT'S WHAT COUNCIL WILLIS.

THANK YOU.

UM, MY QUESTION IS ON PAGE 20 THAT GETS INTO THE DISTINCTIONS BETWEEN THE TIERS OF BENEFITS, AND THIS IS ABOUT THE, UM, THE LINE ABOUT FINAL AVERAGE PAY.

AND SO I, I'M NOT SURE HOW WE, I MEAN, THIS HAS BEST OF FIVE, BEST OF FIVE YEARS OR LAST 60 MONTHS.

MM-HMM.

, WHAT ROLE DOES OVERTIME PLAY IN THIS, IN FIGURING THIS, IS THIS NUMBER TAKEN FROM THE BASE PAY OR IS THERE AN OPPORTUNITY FOR SOMEONE TO TAKE MORE OVERTIME? NO, GREAT QUESTION.

IN LAST FEW YEARS, GREAT QUESTION.

SO WITH EITHER TIER A OR TIER B, WE CALCULATE BASED ON THE HIGHEST FIVE YEARS FOR TIER A OR THE HIGHEST THREE YEARS FOR TIER B.

AND YES, OVERTIME IS A FACTOR IN THE CALCULATION FOR THE FINAL AVERAGE PAYOUT BECAUSE WE LOOK AT EACH YEAR OF PAY IN THAT FIVE YEAR PERIOD FOR TIER A MEMBERS OVERTIME IS, COULD YOU JUST REPEAT THAT REAL QUICKLY? CAN YOU JUST REPEAT HIS ANSWER? I'M SORRY.

OKAY.

WHEN WE DO THIS, WHEN YOU ASK A QUESTION, THEN REPEAT THE ANSWER.

I'M JUST REPEAT THE QUESTION.

CHAIRMAN MILLER.

OKAY.

I'M SORRY, WHAT? THE QUESTION WAS NUMBER ONE? IS NUMBER ONE DUE OVERTIME? IT'S IN THERE.

YES.

OVERTIME IS BASED IN THERE.

YES.

SO JUST GO AHEAD AND, YES.

SO OVERTIME IS CALCULATED IN THE, THE FINAL, UH, FIVE YEAR AVERAGE FORT R A AND FINAL, UH, THREE YEAR AVERAGE FOR TIER B.

OKAY.

WELL, I GUESS THE, THE NUMBERS OF YEARS AND THE AVERAGE OF PAY IS AT THE LAST FIVE YEARS, THE LAST THREE YEARS OF WHAT? SO TIER A MEMBERS HAVE A FIVE YEAR AVERAGE THAT WE LOOK AT THREE YEARS.

TIER A IS THREE, SO TIER A THREE YEARS, TIER B IS FIVE.

TIER B IS FINE.

JUST GOTTA, JUST GOTTA REVERSE.

I'M REVERSING, I'M SORRY.

THAT'S RIGHT.

WE GOT YOU.

I'M SO SORRY.

NO PROBLEM.

THAT'S RIGHT.

SO TIER A IS IS THREE YEARS HIGHEST THREE YEARS, AND TIER B IS FIVE YEARS.

WHEN WE CALCULATE WHAT WE'RE LOOKING AT ARE THE HIGHEST YEARS IN THOSE PERIODS, RIGHT? IF THE HIGHEST YEAR, FOR EXAMPLE, IN YEAR TWO OF THE THREE FOR TIER, UH, A MEMBERS IS $70,000 VERSUS THE OTHER TWO YEARS BEING 60, WE AVERAGE THE THREE YEARS LIKEWISE WITH, WITH, WITH TIER, WITH TIER B AS WELL.

SO ONE OF THE REASONS WE MOVED IT FROM THREE YEARS TO FIVE YEARS WAS TO LESSEN THAT IMPACT OF, OF OVER TIME.

'CAUSE IT'S HARDER TO DO THAT OVER A FIVE YEAR PERIOD.

AND ARE WE STUDYING THIS TO, TO, TO UNDERSTAND IF NO ONE'S WORKED ANY OVERTIME AND THEN ALL OF A SUDDEN THEY'RE WORKING A LOT OF OVERTIME IN THESE LAST THREE YEARS OR LAST FIVE YEARS? I'M JUST, I'M JUST CURIOUS ABOUT, YOU KNOW, GAMING THE SYSTEM OR JUST UNDERSTANDING THIS.

I MEAN THERE'S, YOU KNOW, CERTAINLY LEGITIMATE OVERTIME.

I MEAN, WE KNOW THAT ACROSS SO MANY DEPARTMENTS, UM, THAT, THAT YOU HAVE TO HAVE, THAT'S PART OF WHAT THE CITY NEEDS TO BE RESPONSIVE TO OUR CITIZENS.

BUT I'M ALSO SEEING AN OPPORTUNITY HERE.

I MEAN, ARE WE, DO WE WATCH THAT? HOW DO WE GAUGE THAT? MM-HMM.

.

SO, SO I'LL ANSWER BY SAYING THIS, AND I'M, I'M A FORMER HUMAN CAPITAL, UH, PERSON FOR THE CITY.

UH, IT'S GONNA VARY BY DEPARTMENT BY YEAR, DEPENDING ON THE NEEDS OF SERVICE.

AND SO OUR OBLIGATION IS TO ACCEPT WHAT THE CALCULATION IS AS FACE VALUE AND THEN CALCULATE THAT BENEFIT.

WE WILL LEAVE THE HUMAN RESOURCES, UH, DEPARTMENT, UH, WITH THE RESPONSIBILITY TO DETERMINE WHY THERE'S AN INCREASE, WHY THERE'S A DECREASE, PARTICULARLY FOR CIVILIAN EMPLOYEES.

SO OUR ROLE IS SIMPLY TO CALCULATE.

AND IS THAT HAPPENING? SORRY, IS, I MEAN, DO, IS HR DOING THAT? THAT'S BE A HR QUESTION.

SO THAT WOULD BE A QUESTION FOR THEM.

HR.

SO HR IS

[00:35:01]

NOT HERE, SO WE WOULD WRITE THAT DOWN AND NOTE IT FOR HR, HR.

MR. WEST, YOU GONNA TAKE YOUR TIME? YOU WANT TO PASS IT? UM, YOU WANNA LET'S PASS IT.

I'LL PASS FOR NOW.

THANK YOU CHAIRMAN.

, I WOULD LIKE TO TAKE HIS QUESTIONS.

YOU CAN'T TAKE HIS QUESTIONS.

I KNOW, I'M, I WANNA RESERVE THAT.

SO I'M JUST GONNA DO MINE IN ORDER IF THAT'S ALL RIGHT.

SO I'M GONNA START ON PAGE TWO.

OKAY.

UM, I AM SURPRISED TO LEARN, ARE YOU SAYING THAT THIS PLAN IS PROVIDING A DISABILITY BENEFIT AND A DEATH BENEFIT? YES.

YEAH.

SO THE DISABILITY BENEFIT, UH, WE HAVE A VERY STRICT RULE, BUT I WILL ANNOUNCE IT.

IF YOU'RE ABLE TO WORK ANYWHERE IN THE, IN THE WORLD, AND IT IS VERY LIKELY THAT OUR DESIGNATED PHYSICIAN WILL NOT QUALIFY YOU AS A DISABILITY PERSON.

BUT THAT IS A, A BENEFIT THAT EXISTS.

THE DEATH BENEFIT IS BASED ON A PERSON.

WE GUARANTEE ALL MEMBERS A PAYOUT OF 120 MONTHS, UH, EVEN IN DEATH.

AND SO IF THEY DON'T HAVE A BENEFICIARY OR THEY DON'T HAVE A ELIGIBLE BENEFICIARY SHOULD SAY WE'RE STILL GONNA PAY OUT, UH, IF NOT AT AN A LIFETIME ANNUITY IN A LUMP SUM PAYMENT, UH, A MEMBER OF THEIR FAMILY OR THEIR DESIGNATED ENTITY THAT THEY WANT PAID OUT.

AND SO THAT 120 MONTHS, YOU'RE INCLUDING YOUR MEMBERS, ONLY PEOPLE WHO ARE VESTED OR YOU'RE INCLUDING AN EMPLOYEE WHO JUST STARTED IT DEPENDS ON HOW THE DEATH OCCURRED.

IF THE DEATH OCCURRED WHILE WORKING AND THEY'VE ACCOMPLISHED TWO YEARS OF SERVICE, YES, THEY'RE ELIGIBLE FOR THE 120 YEAR PAYOUT.

UM, HOPEFULLY THE ANSWER 20 MONTHS, 120 MONTHS.

I KEEP SAYING , THESE ARE THE KIND OF BENEFITS THAT WE'RE ACTUALLY NOT, UM, BRIEFED ON AS COUNCIL MEMBERS.

BUT THIS IS AN INCREDIBLE, UM, LIFE INSURANCE BENEFIT THAT I WAS NOT AWARE OF.

AND CERTAINLY AS WE'VE CONSIDERED OTHER BENEFITS THAT MIGHT HAVE BEEN HELPFUL FOR US TO KNOW THAT THERE WAS ALREADY THIS, UM, ABILITY.

SO MY NEXT QUESTION, WHICH IS ON THE SAME SLIDE, IS, UM, THE COST OF LIVING ADJUSTMENT BASED ON C P I, THIS IS NOT REQUIRED.

IS THAT CORRECT? IT'S AN OPTIONAL ITEM.

WELL, IT IS, UH, IT'S ALWAYS BEEN A REQUIREMENT WITHIN OUR PLAN.

AND SO THE COST OF LIVING ADJUSTMENTS BASED ON C P I, WE LOOKED AT THE LAST 12 MONTHS OF, UH, INCREASES.

AND THERE'S BEEN SOME YEARS WHERE THE RETIREES RECEIVED ZERO.

IF YOU REMEMBER, BASICALLY ABOUT THREE OR FOUR YEARS AGO, THERE WAS A 0% INCREASE IN C P I.

THE RETIREES DID NOT RECEIVE ANY INCREASE.

IF YOU LOOK AT LAST YEAR, UM, THERE WAS OBVIOUSLY A GREAT IN INFLATION.

AND SO THEY DID RECEIVE, UH, AN INCREASE.

THE WAY IT'S STRUCTURED WITHIN CHAPTER 40 A IS THAT IT IS PART OF THE PLAN.

SO IT IS, UM, PRESENTED TO THE BOARD, BUT THE BOARD ITSELF DOES NOT HAVE TO APPROVE THE COST OF LIVING ADJUSTMENTS.

BUT THE BOARD IT A CALCULATION BY THE ACTUARY.

THE BOARD IS MADE UP OF MEMBERS, CORRECT? NO, THE BOARD IS MADE UP OF THREE THAT ARE APPOINTED BY THE COUNCIL WHO ARE, UM, NOT EMPLOYEES AT ALL.

THEY'RE INDE, THEY'RE INDEPENDENT EXTERNAL EXPERTS, THREE THAT ARE EMPLOYEES.

SO, BUT THE, BUT THE BOARD CANNOT CHANGE THE COLA.

THE ONLY WAY TO CHANGE THE COLA IS IT HAS TO GO TO RIGHT NOW, I KNOW THAT, BUT RIGHT.

HOW IT'S WRITTEN IN, UH, 48, 35, IT HAS TO BE APPROVED BY THE COUNCIL, THE VOTERS AND THE BOARD.

SO THAT IS THE PROTECTION FOR THE COLA, ALL THREE.

UM, BUT SO THE BOARD ITSELF CANNOT CHANGE IT, IMPACT IT OR DO ANYTHING TO THE COST, COST OF LIVING ADJUSTMENT.

IT IS AN AUTOMATIC CALCULATION DONE BY THE ACTUARY BASED ON NUMBERS.

UM, THAT, BUT BASED ON THE C P I NUMBERS.

SO, AND THIS IS JUST THE SAME QUESTION I'M JUST FOLLOWING UP ON SURE.

AND THIS IS THE END OF THIS ONE.

SO YOU'RE TELLING ME THAT YOUR BOARD VOTED TO GIVE A COLA? NO, NO.

THE, THE, THE COST OF LIVING ADJUSTMENT IS IN THE PLAN DOCUMENT.

AND THE, IT CANNOT BE CHANGED BY, BY THE BOARD ITSELF.

THEY CANNOT INCREASE IT, DECREASE IT.

THEY CAN'T DO ANYTHING TO IT.

IT HAS TO, ANY CHANGE TO THE COST OF LIVING ADJUSTMENT HAS TO COME TO THE COUNCIL AND TO THE VOTERS.

OKAY.

WELL, I HOPE THAT WE'RE GONNA FOCUS ON THIS SINCE WE KNOW THAT THERE ARE NO COLAS HAPPENING ON OUR OTHER PLAN.

THANK YOU CHAIRMAN.

STEWART? NO, I'LL PASS FOR NOW.

YOU'LL PASS, UH, COUNSEL BLACKMAN.

DO WE GET ONE OR TWO NOW? YOU GET TWO.

STILL GOT TIME.

SO, UM, I SEE YOUR CONCLUSION, YOU'RE NOT, UM, SUGGESTING, UH, POVS, BUT WE DO HAVE AN A GAP AND YOU'RE SAYING IT'S 24 MILLION? THAT'S NOT A QUESTION.

YEAH.

UM, WHAT, AND THAT'LL GET US, THAT'S A ONE TIME PAYMENT, CORRECT.

AND IF I'M FALSE, YOU CAN SAY FALSE, BUT ANYWAY.

'CAUSE I, IT'S A, IT'S A 24 MILLION IS AN ANNUAL PAYMENT.

THE 3 71 IS A ONE-TIME PAYMENT.

OKAY.

SO 3 71 IS THE, THE, THE NU THE NUMBER THAT YOU REALLY NEED.

YES.

[00:40:01]

OKAY.

AND IS IT, CAN IT BE DONE IN INSTALLMENTS OR DO YOU NEED IT ALL IN ONE LUMP SUM? OH, IT, IT CAN BE DONE IN INSTALLMENTS.

WHAT'S, WHAT AND WHAT, AND WHAT IS THAT PLAN? DOES IT LOOK LIKE IT'LL BE IN FIVE YEARS, EVERY OTHER YEAR? WHAT IS THAT? WELL, UM, WE CAN COME BACK WITH OPTIONS ON HOW TO WORKING WITH THE CITY STAFF, BUT RIGHT.

WE JUST WANNA PRESENT IT AS AN ANNUAL NUMBER, WHICH IS A 24 MILLION OR A LUMP SUM, BUT HOWEVER THE, THE CITY WOULD LIKE TO SEE IT AND WHATEVER ITERATIONS WE CAN PROVIDE THAT WORKING WITH, UM, YOUR FINANCE DEPARTMENT AND HOW DO WE MAKE SURE WE DON'T GET IN THIS POSITION AGAIN? UH, HOW, WELL, I, I WILL SAY THAT, UM, I THINK THAT THE BOARD HAS BEEN VERY PROACTIVE IN TERMS OF WHAT THEY'VE DONE.

AND YOU'LL, YOU CAN SEE THAT IN TERMS FOR THE INVESTMENT RETURNS, UM, RECOMMENDING TIER B AND GOING, MOVING THAT FORWARD WITH THE CITY AND THE VOTERS, WE'VE BEEN VERY PROACTIVE ON THAT PART.

I THINK ONE OF THE THINGS FOR PEOPLE TO REMEMBER IS THAT WHEN WE ISSUED, UM, UH, THE GREAT FINANCIAL RECESSION, THE PANDEMIC, THAT REALLY DROPPED THE NUMBER OF ACTIVE EMPLOYEES, AND WE, NO ONE COULD ANTICIPATE THAT.

THE CITY COULDN'T ANTICIPATE THAT WE COULDN'T.

AND THAT LOWERED THE CONTRIBUTIONS INTO THE FUND.

AND SO COMING UP WITH A SOLUTION THAT MAKES SURE THAT WE HAVE AN ADEQUATE NUMBER OF CONTRIBUTIONS COMING INTO THE FUND IS SOMETHING THAT'S IMPORTANT.

BUT IT'S, I THINK THAT THERE ARE EXTERNAL EVENTS THAT THE CITY AT THE FUND DID NOT SEE, WHICH WERE GLOBAL AND EXTERNAL TO THE CITY, UH, THAT RESULTED IN LOWER CONTRIBUTIONS FROM LOWER ACTIVE, UH, DECREASE IN ACTIVE EMPLOYEES.

MM-HMM.

YOU THROUGH CAPTAIN WILLIS.

THANK YOU.

SO ON PAGE NINE, YOU TALK ABOUT THE AVERAGE BENEFIT PAGE TO A MEMBER IS $39,000.

SO, UM, I MEAN THAT, LET ME GO ON AND JUST ASK THIS AND JUST SEE, SEE WHAT YOU SAY.

UH, IS THERE EVER A CHANCE WHEN SOMEONE IS, I MEAN, SINCE WE, WE ARE NOT SURE ON OVERTIME HR FIGURES OUT, YOU KNOW, WHAT, I GUESS THE BACKGROUND ON THAT, YOU ALL JUST TAKE WHAT THEY SEND TO YOU.

UM, I MEAN, IS THERE EVER A CHANCE THAT SOMEONE COULD RETIRE AT HIGHER THAN 100% OF THEIR BASE SALARY IF THEY HAVE A LOT OF OVERTIME FACTORED IN? WELL, FIRST OF ALL, LET ME START OFF BY SAYING, UM, THE BENEFIT IS CALCULATED UP TO A PERIOD OF TIME OF 36.4 YEARS OF SERVICE.

LET ME JUST PUT THAT FACT OUT TO MAKE SURE WE ALL UNDERSTAND THAT.

SECOND, THE CALCULATION IF, CAN THEIR CALCULATION BE HIGHER THAN THEIR BASE PAY OF ONE SINGLE YEAR? IS THAT THE QUESTION? IS THAT WHAT I'M UNDERSTANDING? YEAH, I MEAN, I, I GUESS I JUST WANT TO, YOU KNOW, ARE, ARE, IS ANYBODY RETIRING WITH MORE THAN A HUNDRED PERCENT OF WHAT THEIR BASE PAY WOULD BE? IS THE QUE IS IT'S, IT'S, IT'S, IT'S NOT LIKELY.

UH, BUT ANY, ANY GIVEN ONE YEAR, IF THERE IS OVERTIME THAT ESCALATES THE BASE PAY TO SOMETHING GREATER, IT IS A POSSIBILITY.

NOW THAT IS IN MOST CASES, THAT AN ANOMALY ANOMALY, UM, BECAUSE MOST DEPARTMENTS ARE REALLY MANAGING OVERTIME IN THE CIVILIAN DEPARTMENTS.

BUT CAN IT HAPPEN? YES.

AND JUST TO ADD 36.4% IS WHAT'S REQUIRED, UH, TO GET TO A HUNDRED PERCENT OF YOUR PAY.

SO IT, IT'S A VERY FEW ACTIVE EMPLOYEES REACH THAT NUMBER.

CHAIRMAN WI CHAIRMAN WEST.

THANK YOU, CHAIRMAN.

I APPRECIATE THE PRESENTATION.

I'M, I WAS JUST TALKING, I THINK, I THINK YOU HAVE FOUR QUESTIONS I'LL TAKE MAYBE.

OKAY.

WELL, HOPEFULLY NOT THAT MANY.

UH, AS I WAS JUST MENTIONING TO CHAIRMAN ADKINS, I'M HAVE DIGESTING ALL OF THIS, UH, FOR MY BUSINESS.

I, WE OUTSOURCE ALL THIS AND IT'S JUST SORT OF HANDLED.

SO FOR ME TO BE IN THE WEEDS ON THIS AS A NEW EXPERIENCE AND I'M LEARNING, UM, THE, THE THING THAT JUMPS TO ME IS, I GUESS MY MOST IMPORTANT QUESTION IS, IS THE OVERTIME TO CONTINUE THAT DISCUSSION, IT SEEMS TO ME THAT THERE WOULD BE AN INCENTIVE TO JUST TRY TO WORK AS MUCH OVERTIME AS POSSIBLE OVER A THREE YEAR PERIOD TO MAXIMIZE BENEFITS.

AND I, I WOULD DO IT TOO IF I WAS AN EMPLOYEE IN THE SYSTEM.

I MEAN, IF THE SYSTEM'S MADE THAT WAY.

LIKE, IS THERE, HAVE YOU SEEN WHERE LIKE CHECKS AND BALANCES WHERE, WHERE IT'S BEEN PUT INTO OTHER, OTHER PROGRAMS ON, ON MAKING SURE IT'S NOT JUST A, UH, LIKE A FREE FOR ALL KIND OF, WITH WITHOUT CHECKS AND BALANCES TO MAKE SURE THAT OVERTIME'S REALLY NOT NEEDED? THAT'S ANOTHER GREAT QUESTION.

UH, BUT I WILL SAY THAT, UH, YET AGAIN, I THINK THIS IS A QUESTION FOR THE HUMAN RESOURCES DEPARTMENT.

UH, AND THE REASON WHY IT'S A QUESTION FOR THEM IS, REMEMBER WE CAN'T CHANGE ANY OF THE EMPLOYEE'S CONTRIBUTION RATES, WHICH INCLUDES OVERTIME ONCE THEY'VE EARNED IT, IT'S A PART OF THEIR CALCULATION WHERE IT'S THE HIGHEST THREE OR HIGHEST FIVE YEAR AVERAGE.

YEAH.

SO THE CHECKS AND BALANCES NEED TO HAPPEN AT, AT THE FRONT END.

AND, UM, I GUESS I WOULD JUST REQUEST IN FUTURE IF THEY COULD COME BE HELPFUL.

UM, AND I NOTICED THAT ON SLIDE 13 AS MY COLLEAGUE HERE, NOT TO STEAL HER THUNDER, BUT

[00:45:01]

AS SHE POINTED OUT, UM, THIS FORT WORTH CONTRIBUTIONS A LITTLE BIT HIGHER THAN OURS IS, UM, IS, IS, HAS THAT BEEN BROUGHT UP AS A CONCERN? UM, YOU KNOW, IN TERMS OF FOR FORT WORTH RETENTION AND RECRUITMENT, UH, FOR RETENTION AND RECRUITMENT IN THE CITY OF DALLAS OR FOR FORT WORTH AND FOR RETENTION IN THE CITY OF DALLAS? UM, BECAUSE WE'VE GOT A SISTER CITY THAT'S, THERE'S A LARGER CONTRIBUTION, UM, TO THEIR, UM, TO THEIR PENSION.

WELL, ONE OF THE THINGS THAT WE ARE WORKING THROUGH AND WE HOPE TO BRING BACK TO YOU IS A LITTLE BIT MORE DEPTH ON TOTAL COMPENSATION.

AND AS WE COMPARE OURSELVES TO OTHER PENSION FUNDS AND OTHER MUNICIPALITIES, WHEN WE LOOK AT TOTAL COMPENSATION, THERE ARE SOME GLARING, UH, THOUGHTS THAT WE WANNA BRING BACK TO YOU.

JUST ONE EXAMPLE, THIS CHART ILLUSTRATES THAT BOTH THE CITY OF DALLAS AND THE CITY OF FORT WORTH DO NOT CONTRIBUTE TO SOCIAL SECURITY YET THE AVERAGE BENEFIT THAT E R F UH, SEES, UH, FOR ITS MEMBERSHIP IS JUST A LITTLE UNDER 40,000.

WE DON'T KNOW WHAT FORT WORTH NUMBERS ARE, BUT WE CERTAINLY WANNA LOOK AT THAT.

WE WANNA LOOK AT THE CONTRIBUTIONS ON HEALTHCARE AND OTHER AREAS, BUT IT IS A, THOSE ARE FACTORS THAT WE SHOULD LOOK AT.

AND SO WE'LL BE BRINGING THOSE BACK TO YOU.

WELL, AND THAT'S A REALLY A, I MEAN, IT'S, YOU'RE A BIG PIECE OF IT, OF COURSE, BUT IT'S REALLY LIKE THE OVERALL COMPENSATION PACKAGE, WHICH GOES BACK TO HR, I THINK.

UM, ALRIGHT, I'M, I'M GOOD.

THANK YOU, CHAIRMAN.

MIDDLE.

THANK YOU.

UM, SO I'M GONNA SKIP FORWARD, I THINK, 'CAUSE I'M WORRIED THAT I'M NOT GONNA GET TO ASK ALL MY QUESTIONS.

MM-HMM.

.

SO, UM, ON SLIDE EIGHT, YOU'RE TALKING ABOUT PURPOSES AND YOU TALK ABOUT THE ACTUARILY DETERMINED CONTRIBUTION RATE.

UM, WHAT IS YOUR CONTRIBUTION RATE RIGHT NOW? IS THAT THE 36%? UH, YEAH, SO ON, UH, PAGE 12 TALKS ABOUT OUR, THE CONTRIBUTION RATE.

SO YES, 36%.

OKAY.

BUT YET WHEN YOU LOOK ON PAGE 12, YOU'RE REALLY SAYING 14.46%.

SO YES.

SO WITH, WITH UH, 30, THAT'S FROM THE CITY.

SO THE 13.32%, 13.32, IT COMES FROM THE EMPLOYEES.

SO FOR, WE RECEIVE A TOTAL OF, UH, 27.78%.

UH, THE OTHER 8.22% GOES TO THE PAY THE PENSION OBLIGATION BONDS.

AND SO THAT DOES NOT COME THROUGH THE FUND AT ALL.

SO IT SEEMS TO ME THAT WHEN THE FIX WAS PUT IN, THERE IS A GLARING MISTAKE TO REDUCE THE PAYMENT FOR THE PENSION OBLIGATION BOND THAT HAD WE BEEN ACTUALLY CONTRIBUTING THE FULL 22.68% THAT YOU'VE CALCULATED, THEN THIS PENSION WOULD PROBABLY BE PROPERLY FUNDED.

THAT'S, UH, I I DO BELIEVE THAT THE ADDITIONAL 8.22% WOULD'VE HELPED CONSIDERABLY YES.

POINT OF INFORMATION.

CAN YOU EXPLAIN THAT AGAIN IN YES, THE, UH, VERY SIMPLE TERMS, SO UNLESS YOU WOULD LIKE TO EXPLAIN IT, BE BETTER HAPPY TO DO THAT.

YES.

UH, SO ESSENTIALLY WHEN YOU LOOK AT PAGE 12, IT TALKS ABOUT, UH, RIGHT NOW THE CONTRIBUTION RATES AT 36%, WHAT'S REQUIRED INTO THE FUND IS 35.5.

RIGHT? WHAT, UH, AS PART OF THE RECOMMENDATIONS FROM THE 2004 STUDY PLAN, THE 8.22% IS CONSIDERED PART OF THE CITY'S CONTRIBUTION.

AND SO THEREFORE, THE CITY'S CONTRIBUTION OF 22.68, WHICH IS LINE SIX B, YOU SUBTRACT OUT THE 8.22%.

SO THE CITY ACTUALLY CONTRIBUTES TO THE FUND UP THAT THE, THE ACTUAL CASH THE FUND RECEIVES FROM THE CITY'S PORTION IS 14.46%.

SO I'M GONNA SAY IN LAYMAN TERMS, OKAY? OKAY.

YOU'RE SO SMART AND THIS IS YOUR BUSINESS.

AND SO I THINK YOU THINK ABOUT THIS ALL THE TIME, BUT WE DON'T, BUT FOR ME, THE WAY I THINK ABOUT IT IS THAT YOU CALCULATE WHAT DOES THE EMPLOYEE PAY? THE EMPLOYEE MONEY IS ACTUALLY COMING INTO THE PLAN.

YOU THEN CALCULATE WHAT SHOULD THE CITY PAY, BUT YOU'RE TAKING OUT THE COST OF THE PENSION OBLIGATION BOND TO PAY THAT DEBT, RIGHT? MM-HMM.

.

AND SO THEREFORE THE FULL AMOUNT THAT SHOULD BE PAID BY THE CITY ISN'T COMING TO YOU AS A CHECK 'CAUSE PART OF IT'S GOING TO PAY DEBT, CORRECT? THAT'S CORRECT.

CORRECT.

OKAY.

AND SO SINCE YOU'RE NOT GETTING THAT FULL FUNDING THAT HAS PUT THIS PLAN AT RISK OR THAT'S ON THE LIST FOR THE PENSION REVIEW BOARD? THAT'S CORRECT.

OKAY.

IS, IS THAT WHAT HAPPENED WHEN WE DID THIS? WHEN WE WENT TO THE VOTERS, YOU KNOW, WITH ALL THREE, WE KNEW THAT WE WERE GONNA BE SHORT, EXCUSE ME, WE KNEW WE WERE GONNA BE SHORT WHEN WE WENT TO THE VOTERS, WHEN WE CHANGED THE, THE, NO, I DON'T THINK WE KNEW, UM, THAT WE WERE GONNA BE SHORT.

IF YOU REMEMBER THE CHART OF THE, THE CHART, RIGHT.

IF YOU REMEMBER THE 8,371 EMPLOYEES, RIGHT? YEAH.

WE ASSUMED THAT WE WERE GONNA HAVE THAT EMPLOYEE BASE, THAT PAYROLL GROWTH, BUT WE DID NOT.

WE DID NOT.

RIGHT.

AND THEN IT DROPPED BY 20%.

RIGHT.

OKAY.

AND ALSO IT WAS IN THE RECESSION BACK THEN 2008 AND WE RECOVERED BACK IN 2009.

YES.

[00:50:01]

MM-HMM.

.

SO THE CALCULATION, YOU KNOW, THE MARKET WENT WHEN THE POOP, SO THEN JUST VERY, BASICALLY WHEN I LOOK AT CHART 13, THE CONTRIBUTION THAT ONE WOULD EXPECT, THE CITY WOULD PUT IN THE 22.68% THAT YOU HAVE ON THE PRIOR SIDE.

EVEN THAT AMOUNT IS SIGNIFICANTLY LESS THAN HOUSTON OR FORT WORTH.

CORRECT.

BUT THEN WE'RE NOT, WE'RE BASICALLY GIVING HALF OF OF THAT.

CORRECT.

OKAY.

IF, MAY I, MAY I ADD SOMETHING TO THE CONVERSATION? SURE.

OKAY.

SO GO AHEAD JACK.

THANK YOU.

SO THE, THE CITY'S CONTRIBUTION IS IN TWOFOLD.

WE DO PAY THE CONTRIBUTION TO THE PLAN AND WE DO PAY THE DEBT.

SO WE ARE PAYING THE EXPENSE TO THE CITY REPRESENTS THE 22.68%.

I UNDERSTAND YOUR POINT.

IT WOULD BE BETTER FOR THE FUND IF THAT FULL AMOUNT WENT IN, BUT WE FRONTED THROUGH PENSION OBLIGATION BONDS.

MM-HMM.

, I DON'T RECALL THE AMOUNT, BUT A FEW, SEVERAL HUNDRED MILLION DOLLARS.

AND NOW WE'RE PAYING FOR THAT.

SO WE DIDN'T DO PENSION OBLIGATION BONDS AND INFUSION OF CASH PLUS HAVE THE HIGHER CONTRIBUTION THAT ALLOWED US TO NET THAT COST OFF.

THAT'S THE WAY IT WAS SET UP AT THAT TIME.

THAT'S CORRECT.

SO AGAIN, YOU'RE SUPER SMART, YOU DEAL WITH THIS ALL THE TIME.

FOR ME, IN THE MOST BASIC OF LANGUAGE, WHAT I'M HEARING YOU SAY IS, OH WAIT, WE'RE STILL CUTTING A CHECK FOR PENSION EXPENSES.

THAT'S APPROPRIATE.

IT'S JUST THAT ONLY HALF OF IT'S GOING TO THE PENSION AND HALF OF IT'S GOING TO DEBT TO PAY FOR WHAT WENT TO PENSION IN 2005, RIGHT? YES.

TO PAY FOR THE DEBT TAKEN ON TO SHORE UP THAT SOLUTION AS A ONE-TIME INFUSION IN 2005.

RIGHT.

BUT SO THEN AGAIN, IN THE MOST SIMPLE TERMS THAT I CAN SAY IT, WHAT THAT TELLS ME IS THAT THE PENSION FIX NEVER WAS A FIX BECAUSE THOSE DOLLARS ARE ACTUALLY NOT CONTINUING TO FLOW TO THE PENSION TO SERVICE THE, THE NORMAL COSTS.

RIGHT.

IT'S INSTEAD PAYING A DEBT WAS A FIX.

SO I, AND SO WE'RE BASICALLY PAYING INTEREST, WE'RE PAYING DEBT TO PAY FOR OUR NORMAL COSTS.

SO THE, THE, THE PENSION OBLIGATION BONDS AT THE TIME WERE ANTICIPATED TO FIX YES.

TO TO BE A SOLUTION.

RIGHT.

UH, HOWEVER, A LOT HAS HAPPENED SINCE THEN.

THE ASSUMPTIONS RELATED TO PAYROLL HAVE CHANGED SIGNIFICANTLY.

THAT'S CORRECT.

VERSUS WHAT WAS ASSUMED.

RIGHT.

THERE HAVE BEEN SOME HARD YEARS IN INVESTMENTS MM-HMM.

.

SO 18 YEARS LATER WE HAVE TO REVISIT THAT.

THAT'S CORRECT.

RIGHT? THAT'S CORRECT.

WHAT ARE THE CURRENT ASSUMPTIONS TO PAYROLL, ESPECIALLY IN STAFFING, UH, UH, THE CURRENT ASSUMPTIONS FOR PAYROLL? UM, IT IS, WELL, I I CAN ONLY TALK ABOUT WHAT I RECEIVE.

YOU'RE ON THE FRONT END.

THAT'S DIFFERENT.

THAT THAT'D PAYROLL.

THAT'D BE A JACK ALLEN QUESTION.

THAT'S A GOOD QUESTION FOR YOU, JACK.

THAT'D BE YOUR QUESTION, JACK.

THAT'S NOT THEIR COURSE.

WELL, IN, IN ALL FAIRNESS, IT'S WHAT YOU'RE USING TO CALCULATE YOUR NUMBERS THAT MATTERS EVEN IF IT'S NOT REALITY.

AND SO CLEARLY, YOU KNOW, WHEN WE LOOK AT THIS CHART THAT SHOWS, UM, THAT PAYROLL DIDN'T HAPPEN AS YOU EXPECTED.

SO WHAT NUMBER ARE WE ON? I DON'T KNOW.

OH, SO HERE WE GO.

PAGE 26.

OKAY.

SO YOU MADE AN ASSUMPTION THAT WE WOULD INCREASE 3.5% IN STAFFING.

MM-HMM.

, THANK GOODNESS IT DIDN'T HAPPEN.

I HOPE WE NEVER HAVE 3.5% STAFFING INCREASES EVERY YEAR.

AND SO I GUESS MY QUESTION FOR YOU IS, ARE YOU STILL PROJECTING A 3.5% INCREASE TO HEADCOUNT EVERY YEAR? OR HAVE YOU REDUCED THAT TO SOMETHING MORE PLAUSIBLE? AND CHERYL, ISN'T THAT AN ANTICIPATED INCREASE IN PAYROLL PAY, PAYROLL COUNT, YOU THINK OF MERIT INCREASES, THAT'S 3%.

CORRECT.

THAT WOULD, EVEN IF YOU HAVE THE SAME ACTIVE EMPLOYEE NUMBER, RIGHT.

IF YOU HAVE A A, I THINK ON AVERAGE YOU HAVE A 3% MERIT INCREASE.

SO THAT'S PAYROLL GROWTH, NOT HEADCOUNT.

THAT'S CORRECT.

PAYROLL GROWTH.

YES.

PAYROLL GROWTH.

OKAY.

YOU WANNA DO ONE MORE QUESTION? OH, YOU'RE GONNA LET ME DO ONE? OKAY.

YES.

THANK YOU.

LAST ONE.

GO TO GO TO, UM, YOU ARE BEING GENEROUS.

THANK YOU.

OKAY.

JUST 'CAUSE YOU CAME TO THE MEETING TODAY.

.

OKAY.

SO MY QUESTION FOR YOU IS THIS, WHEN THIS WHOLE, UM, 2015 RULE WENT IN, IT SAYS THAT THE PENSION LIABILITIES WERE 2.15 BILLION.

IS THAT RIGHT? NO, NO.

THAT WAS THE EXPECTED OF SAVINGS OVER 30 YEAR PERIOD OF PUTTING THE FI PUTTING THE TIER B IN.

OKAY.

AND SO WAS 2.15 BILLION OVER 30 YEARS.

SO WHAT WAS THE UNFUNDED LIABILITIES WHEN YOU STARTED THIS WHOLE EFFORT TO SAVE THE 2.15 BILLION? I HAVE TO GO BACK AND LOOK.

I DID NOT BRING THAT NUMBER, BUT I CAN GET THAT TO YOU.

[00:55:01]

OKAY.

WELL, I I THINK IT'S IMPORTANT TO UNDERSTAND LIKE WHERE IT WAS AND THEN WHERE IT IS TODAY.

NO, CORRECT.

AND I THINK THAT ALSO AS, AS DAVID MENTIONED, THE REASON WHY WE DID TIER B WAS AROUND THE FACT THAT PEOPLE WERE LIVING LONGER.

AND WE COULD SEE THAT WHEN THE GENERATIONAL MORTALITY TABLES, WE COULD SEE THAT IN OUR EMPLOYEE BASE.

AND WE SAID IF PEOPLE ARE LIVING LONGER, THEN WE NEED TO EXTEND, LIKE FOR THE AF AGE OF RETIREMENT FROM 60 TO 65, WE NEEDED TO MAKE THAT LONGER.

THAT WAS MORE OF THE FIX.

SO THAT LONG TERM WE WERE PROVIDING THE SAME BENEFIT FOR TIER B, WHO WOULD HAVE IT LONGER, WHO WOULD LIVE LONGER AND WORK LONGER AS TIER A.

SO THAT, SO ARE YOU SAYING THAT YOU THINK MOST OF THIS IS, UM, OUT OF WHACK, SO TO SPEAK, BECAUSE OF, UM, LIFE EXPECTANCY? NO, NO.

I'M, WHAT I'M SAYING IS THE REASON THAT WE, THE CATALYST FOR TIER B WAS THE FACT THAT PEOPLE, WE SAW PEOPLE WERE LIVING LONGER AND WE NEEDED TO ADJUST THE BENEFIT STRUCTURE TO, TO ACCOUNT FOR THE FACT THAT PEOPLE ARE LIVING LONGER.

OKAY.

BUT TIER A, I MEAN, I JUST WANNA MAKE SURE I'M UNDERSTANDING THIS RIGHT.

TIER A NEVER HAD A BENEFIT CUT, NOTHING CHANGED FOR THEM? UH, NO.

UH, THEY, BECAUSE AT THAT POINT, UM, WE WERE FOCUSED ON THE NEXT GENERATION.

OKAY.

WE WEREN'T FOCUSED, WE WEREN'T NEVER HAD A BENEFIT CUT.

CORRECT.

UH, NO, THEY DID NOT HAVE ANY BENEFIT CHANGES.

OKAY.

OKAY.

THANK YOU STUART.

WES, I'VE GOT SOME, SOME YOU DID YOUR FOUR, RIGHT? NO, BUT I, I WON'T HAVE THAT MANY CHAIRMAN TWO.

UH, THAT'S FINE.

LET'S GO.

WE GOT TIME.

ALRIGHT.

I GUESS ONE IS A COMMENT, WHICH CAN BE ONE OF MY QUESTIONS.

OKAY.

IS ON SLIDE 13, UM, WITH THIS CONVERSATION OF US HAVING TO PAY PART OF OUR CONTRIBUTION TO PAY DOWN THE DEBT, THAT WAS NOT CLEAR TO ME.

I'M GLAD IT IS CLEAR NOW, AND I, I THINK I'VE GRASPED IT.

UM, I FEEL LIKE THIS CHART, DO WE KNOW IF AUSTIN FORT WORTH AND HOUSTON, PART OF THEIR CONTRIBUTION IS ALSO TO PAY DOWN ON PAST DEBT? OR DO WE, IS THAT, IS THIS AMOUNT ALL GOING TOWARDS FUTURE CONTRIBUTIONS? UM, SO THIS, THIS, UH, RESEARCH CAME FROM OUR ACTUARY WHO WORKS WITH THESE OTHER PENSION FUNDS.

OKAY.

WE DON'T HAVE THE ANSWER TODAY, BUT CERTAINLY WE CAN BRING THAT BACK RIGHT.

TO IF, SEE IF THERE'S ANY BIFURCATION OF THEIR CONTRIBUTION TO POVS.

NICE.

'CAUSE I DON'T, AND I THINK IT WOULD BE HELPFUL TO ADD ANOTHER COLUMN HERE TO SHOW HOW MUCH OF OUR 22 POINTS OR SIX 8% IS GOING TOWARDS PAST DEBT.

JUST TO BE MORE ACCURATE ABOUT THIS.

YEAH.

CHAIRMAN WEST NOT CUTTING YOU OFF.

UM, AND DAVID, AND THANK Y'ALL FOR DOING, BUT I THINK THAT, UH, ONE THING I WANNA PUT A POINT PUT ACROSS THAT Y'ALL DO IT ACTUARY ONCE A YEAR, YOU GOT ACTUARY COMING IN AND I THINK IT'S SOMETHING THAT WE, WHAT WE TALKING ABOUT IS ACTUARY.

THEY LOOKING AT THE DATA, THE DATA THAT COME IN AND THEY DETERMINE WHAT'S GOING ON.

SO THEY NOT PREPARED TO DO THAT.

I, I, I'M, I AIN'T TRYING TO COVER FOR YOU MM-HMM.

, BUT IT'S GREAT TO HAVE AN ACTUARY THERE WHO ACTUALLY DO IT, WHO, WHO GET THAT DATA AND SAID THIS HOW WE SAID THIS, WHAT WE SHOULD GO FORWARD.

SO I KNOW SOMETHING THAT WE NEED AN ACTUARY TO ANSWER THOSE QUESTION PROPERLY.

I DON'T THINK THEY CAN ANSWER IT BECAUSE THEY ACTUARY ACTUALLY DO IT.

BUT ONE THING WE DO KNOW, THEY DO THEIR ACTUARY ONCE A YEAR.

THEY COME IN ONCE A YEAR.

SURE.

WELL, THIS SHOULD ALL BE PUBLIC PUBLICLY AVAILABLE INFORMATION, I WOULD THINK IN THESE OTHER CITIES.

MAYBE THAT'S SOMETHING HR COULD HELP US WITH.

'CAUSE I THINK IT'S AN IMPORTANT TOOL FOR RECRUITMENT AND RETENTION FOR US TO UNDERSTAND WHAT THIS CONTRIBUTION IS AND WHAT'S REALLY HAPPENING HERE.

AND 'CAUSE WE NEED TO BRING HR, SO IT'D BE AN HR QUESTION, BUT ALSO I THINK THE ACTUARY THAT, UH, YOUR ACTUARY, YOU KNOW, WHO DOING YOURS? I THINK WE GOT TWO DIFFERENT ACTUARIES.

SO WHO'S ACTUALLY FOR THE PENSION? I MEAN FOR GABRIEL ROTOR SMITH IS OUR ACTUARY.

SO, SO THAT'S WHAT WE PROBABLY NEED TO BRING ON IN TO EXPLAIN WHAT DATA DID THEY COMPREHEND FIRST TO COME UP WITH A DECISION, YOU KNOW, HOW TO GO FORWARD.

OKAY.

I'M SORRY.

I DIDN'T MEAN NO, I, I'M TRYING TO MAKE SURE IT MAKES SENSE.

UM, YEAH.

I, THAT REQUEST IS JUST OUT THERE.

I, I THINK I'M OKAY.

THANK YOU.

I JUST GOT A FEW QUESTIONS.

THANK YOU FOR LOOKING AT THIS.

I, UM, I JUST WANNA MAKE SURE ON, ON ONE CHART THAT, UH, WE LOOK AT IS ON PAGE FIVE, I BELIEVE, UH, THE INVESTMENT HISTORY.

AND IF YOU LOOK AT THIS INVESTMENT HISTORY AND YOU LOOK AT WHAT'S GOING ON, YOU SEE THE TREND, YOU KNOW, YOU SEE THE, THE ENTRY RATE GOING DOWN, YOU SEE WHAT HAPPENED IN 2008, BUT YOU ALSO SEE WHAT HAPPENED IN 2001, 2000, 2002.

AND THEN YOU LOOK ALSO IN 2011, THEN HIT AGAIN IN 2015.

YOU SEE THAT TREND AND YOU ALSO SEE THE, UH, THE, THE, THE RETENTION OF EMPLOYEES.

YOU KNOW, THEY GONE, THE MONEY NOT PUT PAID BACK INTO IT.

BUT THE KEY, WHEN I'M LOOKING AT ON THIS HISTORY, IT SHOWED THAT Y'ALL ARE DOING A GREAT

[01:00:01]

JOB.

I MEAN, YOU KNOW, Y'ALL DOING A GREAT JOB.

YOU'RE DOING A FANTASTIC JOB BECAUSE, UH, I KNOW DAVE, YOU'RE NOT GONNA TAKE THE CREDIT, BUT MM-HMM.

, THE SISTER'S DOING A GREAT JOB, , YOU KNOW, SHE'S DOING A FINE JOB.

BUT THE POINT IS TO EXPLAIN THAT TO THE COUNCIL TO EXPLAIN THAT THE PROCESS AND THE PROCEDURE, HOW YOU CAME ABOUT THIS YEAR, IT'S NOT SOMETHING THAT YOU AS A BOARD DOING.

WE AS A COUNCIL, WE WENT TO THE VOTERS.

SO WE WENT TO THE VOTERS, THE VOTER HAD A SAY IN WHAT WE GONNA DO.

SO IT WAS A REFERENDUM HOW WE DID THE EMPLOYEES.

SO, SO I'M TRYING TO MAKE SURE WE UNDERSTAND THAT IT'S SOMETHING THAT WE DIDN'T DO BY OURSELF.

IT WERE A TRIPARTY AGREEMENT.

MM-HMM.

SO I JUST WANNA MAKE SURE THAT, UH, THE COUNCIL UNDERSTAND THAT, THAT Y'ALL DO NOT MAKE DECISION OUTTA THE FLY.

YOU KNOW, Y'ALL COME TO THE COUNCIL THEN IF, IF THEY DON'T AGREE, WE GO TO THE VOTERS, THEN THEY'LL AGREE.

THEN WE ALL HAVE A REFEREND AND, AND, AND PROPOSITION AND, AND WE TRYING TO PUT, NEED TO GO THERE.

BUT, UH, BUT IN THE SAY SO, BUT I SAID, Y'ALL DOING A GREAT JOB.

AND, AND I'M AND WHAT, UH, MS. BLACKMAN SAID, SHE SAID, ONE GOOD THING, YOU KNOW, YOU LOOK ON PAGE, UH, SEE WHAT PAGE WAS THIS? UH, I GOT MY PAGE.

YOU MISSED, UH, I THINK WHAT WHAT PAGE HAD SHOWED THAT DRAFT FOR 24%, $24 MILLION I THINK.

OH YEAH.

THE DEBT.

MM-HMM.

, I DON'T HAVE IT.

UH, PAGE 28.

PAGE 28.

AND SO I WANT KINDA EXPLAIN THIS CONTRIBUTION GAP IN LABOR RETURN BECAUSE PEOPLE WANT TO UNDERSTAND THIS, YOU KNOW, YOU SAID 24 MILLION, UH, THE FIRST YEAR OF THE LUMP SUM COUNTRY IN 3 71.

HOW DO WE REDUCE THIS AND HOW DO WE GET TO THIS NUMBER? SO IN TERMS OF, SO WHAT WE, UH, WHAT WE DID WAS WE WENT TO OUR ACTUARY AND WE ASKED THEM TO CALCULATE.

THEY SAID, LOOK AT THE THE F SS R P REQUIREMENTS, LOOK AT OUR CURRENT PROJECTION, MAKE SURE THAT YOU UNDERSTAND.

AND THEY DO, UH, ABOUT THE PENSION OBLIGATION BONDS AND ROLLING OFF IN 10 YEARS AND WHAT IS THE CALCULATION THAT WE NEED.

'CAUSE RIGHT NOW OUR FUNDING PERIOD'S 52 YEARS, WE HAVE TO GET TO 40.

SO IT'S A, YOU KNOW, IT'S 12 YEARS THAT WE HAVE TO GET TO, WHAT WOULD THAT TAKE? AND SO WHAT OUR ACTUARY CAME BACK AND WE WANTED AND SEE IT IN SEVERAL FORMS. SO SOMEONE SAID, WHAT WOULD IT TAKE FOR A LUMP SUM THREE $71 MILLION IF WE DIDN'T WANNA DO A LUMP SUM? AND IF THE, AFTER WE DECIDED TO DO IT EVERY YEAR, IT'S AN ADDITIONAL $24 MILLION.

NOW THERE'S SEVERAL WAYS TO GET TO THE $24 MILLION.

AND THAT IS, I THINK, PART OF THE SOLUTION, WHICH WILL COME BACK TO YOU IN NOVEMBER, DECEMBER.

WHICH, HOW DO YOU, HOW DO YOU GET TO THAT AMOUNT? UH, THE OTHER PIECE IS REALLY IMPORTANT IS TAKING OFF THE 36% CAP AND, UM, AND SO THAT THE CONTRIBUTION WILL FLOAT.

THE ACTUARY SEES THAT AS THE LONG-TERM SOLUTION FOR THE PLAN.

AS LONG AS THE CONTRIBUTION RATE FLOAT FLOATS BASED ON THE FUNDING STATUS AND THE PERIOD THAT IT WILL, THAT IT WILL BE A LONG-TERM SOLUTION.

AND WHEN DID YOUR ACTUARY COME BACK TO YOUR BOARD TO GIVE YOU YOUR UPDATE? WHEN DID IT COME? WELL, I, I, WE'RE GONNA WORK WITH, UM, JACK AND WHATEVER DATE YOU HAVE DECIDED THAT YOU WOULD LIKE FOR US TO COME BACK IS WHEN WE WILL, WE WILL HAVE, I GUESS, JACK, DO YOU KNOW WHEN THEY'RE DUE? I MEAN, THEY, THEY DO IT ONCE A YEAR.

SO DO YOU KNOW WHEN THEY, WHEN THEY COME BACK TO PRESENT THAT TO THEIR BOARD? HE'S ASKING ABOUT YOUR ANNUAL UH, OH, THE ANNUAL, THE ANNUAL IS DONE IN THE, UM, BEGINNING OF THE SECOND QUARTER.

'CAUSE WE, WE ARE ON A, UM, A YEAR, A FISCAL YEAR BASIS.

AND SO THAT'S WHERE THAT, BUT WE STILL HAVE OUR 2022 RESULTS THAT WE CAN USE AS A BASE.

OKAY.

SO IT'S BASED ON THE 22.

IT'S, IT'S, UH, YOU SAID THE FIRST QUARTER IN APRIL WE DONE MISSED YOUR, ACTUALLY THEY ALREADY DID THEIR, UH, SUMMARY, UH, WHEN IN APRIL OR MAY THIS YEAR? YEAH.

WHEN THE, WHEN THE, UH, FISCAL YEAR ENDS IN DECEMBER 31ST, 2 20 22.

WE GIVE THEM THE DATA, THEY RUN IT THROUGH AND THEY USUALLY PRESENT TO THE BOARD AT THE, UH, MARCH OF, UH, MARCH, APRIL MEETING.

BUT WE CAN DO THE CALCULATION BEFOREHAND USING 22, 2022 DATA AND PROJECT IT FORWARD.

OKAY.

SO THAT'S WHAT I WOULD LOVE FOR YOU TO DO, YOU KNOW, WHATEVER THEY HAD THE 22 PROJECT, THAT DATA, YOU KNOW.

YEAH.

WE CAN MOVE.

YES.

MM-HMM.

.

OKAY.

THANK YOU JACK, YOU ABOUT TO THIS NUMBER.

OKAY.

OKAY.

THE NEXT BRIEFING COMING UP.

I'M SORRY.

ARE THERE NO MORE QUESTIONS ABLE TO BE ASKED? NO, WE, WE OUTTA TIME TWO 10.

WE GOT THE PENSION.

ALLOW AN HOUR FOR EACH ONE.

SO WOULD IT BE POSSIBLE YES, JACK? YES, JACK, IF JACK GOT 'EM, MIC YES, GO AHEAD.

WOULD IT BE POSSIBLE TO JUST ASK THE QUESTIONS AND HAVE THE ANSWERS SENT TO US BY MEMO? WHY WON'T YOU JUST WRITE BY WRITE, PUT IT IN WRITING AND SEND IT TO THEM AND THEY SEND IT BACK TO YOU? WELL, I'M HOPING IT'LL BE A PUBLIC DOCUMENT, BUT, OKAY.

WELL, THANK YOU.

I'LL DO THAT.

I'LL POST IT.

THE ONE THING THAT I WANTED TO SAY, I THINK EVERYBODY KNEW THIS, BUT THAT THAT WAS JUST REFERENCING THE, UH, CIVILIAN EMPLOYEES, THE NON-UNIFORM.

AND IT ALSO INCLUDES GENERAL FUND AND NON-GENERAL FUND.

IT'S ALL CIVILIAN, UH, EMPLOYEES OF THE CITY.

SO, UH, ABOUT 45% OF THE COST IS BORNE BY ENTERPRISE FUNDS.

ABOUT 55% IS BORNE BY THE GENERAL FUND.

SO JUST WANTED TO THROW THAT OUT THERE.

BEFORE

[01:05:01]

WE MOVE TO THE POLICE AND FIRE CHAIRMAN, MENISON, IF YOU CAN PUT ON RECORD, YOU WANT TO ASK A QUESTION RIGHT QUICK WITH NO RESPONSE, JUST ASK SOME QUESTIONS ON RECORD, THEN THAT WAY THEY CAN GO AHEAD AND AND SEND IT TO THEM.

OKAY? SURE.

THANK YOU.

BECAUSE THEY ABOUT TO LEAVE.

OKAY.

SO DO YOU WANT ME TO DO THAT? JUST ASK, JUST, JUST PUT IT ON, RIGHT.

WHAT IS YOUR QUESTION? AND THEY CAN ASK YOU.

SO MY QUESTIONS ARE IN THREE AREAS.

THE FIRST IS CONFIRMING NUMBERS.

UM, THE CITY MANAGER HAS REPEATEDLY SAID THAT THERE'S ABOUT A BILLION DOLLAR OF UNFUNDED LIABILITY IN THIS PLAN, BUT IT LOOKS IN THE DOCUMENTS LIKE IT'S 1.4 BILLION.

I KNOW AT G P F M THEY HAD SAID 1.2.

OKAY.

SO IF IT IS NOW 1.4 INSTEAD OF ONE OR 1.2, I'D LIKE TO UNDERSTAND WHERE THAT DIFFERENCE CAME IN.

OKAY.

MY NEXT SET OF QUESTIONS IS RELATED TO, UM, THE MULTIPLIER.

AND IF YOU COULD DEFINE FOR FOLKS WHAT THE MULTIPLIER IS, IF YOU COULD EXPLAIN THE CHANGES TO THE MULTIPLIER THAT HAPPENED WITH CLASS A AND CLASS B AND, UM, THAT WOULD BE IMPORTANT I THINK, FOR US TO ALL UNDERSTAND, ESPECIALLY AS WE'RE LOOKING AT THINGS.

AND THEN, UM, MY LAST AREA OF INTEREST IS ABOUT THIS STUDY GROUP THAT YOU'VE PUT TOGETHER.

AND I WANNA UNDERSTAND IF IT'S ALL EMPLOYEES THAT ARE PART OF THAT STUDY GROUP AND, UM, ASSUMING THAT IT'S TRUE, THEN OF COURSE ALL OF THOSE EMPLOYEES ARE MEMBERS.

AND I'M CONCERNED ABOUT GETTING RECOMMENDATIONS FROM A STUDY GROUP THAT HAS ALL MEMBERS OF THIS SO THAT OPTIONS THAT MAY NOT BE FAVORABLE TO THE MEMBERS MAY NOT BE PRESENTED TO COUNCIL.

AND I WOULD LIKE TO RECOMMEND THAT AN OUTSIDE GROUP TAKE THE ACTUARIAL DATA FROM THE PLAN AND PROVIDE THOSE RECOMMENDATIONS TO US SO THAT THERE'S NOBODY, YOU KNOW, WE ALL LOVE JACK, YOU'RE TERRIFIC.

OKAY.

THAT'S, THAT'S NOT A QUESTION.

SO, OKAY.

SO MY QUESTION IS IF THAT IS A POSSIBILITY AND IF, IF THAT'S TRUE.

'CAUSE I DON'T KNOW IF THAT IS, AND IF IT IS HOW WE CAN GET OUTSIDE RECOMMENDATIONS.

OKAY.

SO MAKE SURE ALL QUESTION, YOU KNOW, ON DEALING WITH QUESTION, NOT COMMENTS.

JUST QUESTION.

YES, SIR.

MS. COUNSEL ONE BLACKMAN.

JACKIE, YOU GONNA RELAY THIS TO THE EMPLOYEE? OKAY, YOU'RE GOOD.

THEY, IT'S ALREADY, THEY'RE NOT RECORDED.

? NO, THEY THAT, BUT THEY'RE GONNA RECORD IT, SO I JUST WANNA MAKE SURE IT'S, SO JUST MAKING SURE.

ALRIGHT.

OKAY.

ANYONE ELSE? OKAY.

OKAY.

KELLY, IS YOU UP? ? GOOD AFTERNOON.

UM, MAYOR PROTON ATKINS AND MEMBERS OF THE COMMITTEE, THANK YOU FOR ALLOWING US TO SPEAK TO YOU TODAY.

UM, I'M KELLY GOTCH.

I'M THE EXECUTIVE DIRECTOR OF THE DALLAS POLICE AND FIRE PENSION SYSTEM.

I HAVE WITH ME JOSH MON, HE'S OUR DEPUTY EXECUTIVE DIRECTOR AND OUR GENERAL COUNSEL.

WE APPRECIATE, UM, BEING ABLE TO BE HERE TODAY.

AND AS YOU ARE WELL AWARE, ABOUT THREE WEEKS AGO YOU HAD A, UM, COUPLE GENTLEMEN SPEAK TO YOU, UM, WHO WERE REPRESENTING THE MAYOR'S COMMITTEE, BILL QUINN AND, UM, ROB WALTERS.

BOTH BILL AND ROB USED TO BE ON OUR BOARD, AND THEY PROVIDED WITH TO YOU A LOT OF BACKGROUND INFORMATION ABOUT SOME OF THE PROBLEMS THAT WE HAD IN THE PAST, UM, WITH OUR FUNDING AND WHY IT WAS WHAT IT WAS AND WHAT WE'VE DONE WITH INVESTMENTS OVER TIME.

SO I'M NOT GOING TO REPEAT A LOT OF THAT, BUT HAPPY TO ANSWER ANY QUESTIONS ABOUT THAT TODAY.

I WANNA TALK A VERY HIGH LEVEL ABOUT BACKGROUND AND TALK ABOUT PRIOR PLAN CHANGES.

JOSH IS GONNA TALK ABOUT A LITTLE, UH, A LITTLE BIT ABOUT LITIGATION RELATED TO THOSE PLAN CHANGES.

I WANTED TO GO INTO THE BENEFIT STRUCTURE THAT WE HAVE NOW, AND THEN, UM, KIND OF END WITH THIS, UM, A REPEATING REALLY WHAT YOU HEARD LAST TIME FROM BILL AND ROB WITH OUR CURRENT CHALLENGES AND WHAT WE'RE DOING TO TRY TO MEET THOSE AS WE GO FORWARD.

SO THAT IS THE PLAN TODAY.

SO IF YOU COULD GO TO, YOU'RE ALREADY THERE.

THANK YOU FOR THAT SLIDE.

SO, JUST AS A WAY OF BACKGROUND, UM, DALLAS POLICE AND FIRE PENSION SYSTEM PROVIDES RETIREMENT, DEATH AND DISABILITY BENEFITS TO POLICE AND FIREFIGHTERS EMPLOYED BY THE CITY OF DALLAS.

AND BECAUSE OF THE QUESTION IN THE PRIOR SESSION, I WANTED TO CLARIFY BY DEATH, WHAT I MEAN HERE IS SURVIVOR BENEFITS.

THIS ISN'T A LUMP SUM PAYMENT THAT YOU GET A CERTAIN AMOUNT OF 10 YEARS OF PAYMENTS REGARDLESS IF YOU WERE TO RETIRE AT PASS AWAY, SAY A MONTH AFTER YOU RETIRE, AND THEN YOUR SURVIVOR DIES WITHIN A YEAR, THAT BENEFIT IS OVER.

THERE'S NO 10 YEAR GUARANTEE OR ANYTHING LIKE THAT.

THERE IS ONE EXCEPTION TO THAT, BUT IT'S RARE FOR, UM, ACTIVE DEATHS WITH NO SURVIVORS.

THERE'S A PRESENT VALUE, MINIMUM BENEFIT THEY GET, BUT THAT'S A RARE SITUATION.

SO THAT'S WHAT, UM, WE ARE ALL ABOUT.

WE HAVE TWO PENSION PLANS, AS YOU KNOW, ONE OF 'EM, UM, IS SET OUT IN THE LEGISLATION AND THAT IS WHAT WE CALL THE REGULAR PLAN OR THE COMBINED PLAN.

UM, 99.2% OF OUR ASSETS AND LIABILITIES ARE IN THAT PLAN.

THE MEMBERSHIP IS, UM, 5,085 ACTIVE MEMBERS AND 5,289 RETIREES AND BENEFICIARIES.

WE ALSO HAVE THE SUPPLEMENTAL PLAN OR THE CHIEF'S PLAN, AND THAT IS ACTUALLY A PLAN THAT'S SET OUT IN THE CITY ORDINANCE.

UM, 0.8% OF OUR ASSETS AND

[01:10:01]

LIABILITIES RELATE TO THAT PLAN.

AND WHAT THAT PLAN DOES IS IT JUST CAPTURES THE, UM, SALARIES OF PEOPLE THAT GO ABOVE THE CIVIL SERVICE RANKS TO MAKE SURE ALL OF THEIR SALARIES, UM, ACCOUNTED FOR IN THEIR PENSION BENEFIT.

SO THAT'S WHY THERE'S TWO PLANS.

THE REGULAR PLAN CAN'T GO ABOVE THE CIVIL SERVICE RANKS.

EVERYTHING WE'RE GONNA TALK ABOUT TODAY, AND REALLY THE FUNDING CHALLENGES WE HAVE, HAVE TO DO WITH THE REGULAR PLAN.

OUR, UM, PENSION SYSTEM IS AN INDEPENDENT ORGANIZATION FROM THE CITY OF DALLAS.

UM, WE SEPARATED, I THINK IN THE EARLY TWO THOUSANDS FROM THE CITY.

WE USED TO BE A CITY DEPARTMENT SIMILAR TO E R F.

UM, WE HAVE AN 11 MEMBER BOARD.

UM, THE MAJORITY IS APPOINTED BY THE MAYOR WITH CONSULTATION FROM THE COUNCIL.

THERE'S ONE POLICE REPRESENTATIVE AND ONE FIRE REPRESENTATIVE THAT ARE ELECTED BY ACTIVE MEMBERS.

AND THEN WE HAVE THREE MEMBERS THAT WE REFER TO AS NON-MEMBERS BECAUSE THEY'RE NOT MAYORAL APPOINTEES AND THEY CAN'T BE PART OF THE SYSTEM.

SO THEY'RE NOT POLICE OR FIRE, BUT THEY ARE ELECTED BY, UM, THE, ALL OF THE MEMBERS OF THE SYSTEM, BOTH RETIREES AND ACTIVES.

SO THAT'S THE MAKEUP OF OUR BOARD.

OUR TRUSTEES HAVE MINIMUM REQUIREMENTS.

THEY HAVE TO HAVE DEMONSTRATED FINANCIAL ACCOUNTING, BUSINESS INVESTMENT, REAL ESTATE OR ACTUARIAL EXPERIENCE.

AND WE ALSO ARE REQUIRED BY THE STATE STATUTE TO HAVE AN INVESTMENT ADVISORY COMMITTEE THAT HAS A MAJORITY OF OUTSIDE INVESTMENT PROFESSIONALS.

SO THAT'S HOW WE OPERATE.

UM, AS FAR AS PLAN CHANGES.

ON THE NEXT SLIDE, I WANTED TO POINT OUT, UM, D P F P HAS NEVER HAD PENSION OBLIGATION BONDS FROM THE CITY.

UM, IN 2006, THEY DID THEIR FIRST PLAN CHANGE TO TRY TO SAVE MONEY.

AND WHAT THEY DID IN 2006 WAS FOR A NEW TIER OF PEOPLE HIRED AFTER THAT DATE, THEY CHANGED THE COLA TO, INSTEAD OF AN AUTOMATIC 4% COLA, IT WAS A COLA THAT WAS AT THE DISCRETION OF THE BOARD.

BUT THAT WAS ONLY FOR NEW EMPLOYEES HIRED AFTER 2006.

IN 2011, THEY RECOGNIZED THAT THEY NEEDED A MUCH LARGER FIX, AND THEY ONCE AGAIN ADDED A NEW TIER OF BENEFITS FOR ANYBODY HIRED.

AFTER FEBRUARY 28TH, 2011, THEY MADE DRAMATIC CHANGES TO THAT TIER, UM, OF INDIVIDUALS.

THEY REDUCED THE MULTIPLIER.

THEY HAD A LONGER VESTING PERIOD.

THEY EXTENDED THE PERIOD TO INCLUDE THE AVERAGE, UM, PAY CALCULATION.

THEY HAD A HIGHER RETIREMENT AGE.

THERE WAS NO EARLY RETIREMENT OPTIONS.

THEY REDUCED THE MAXIMUM BENEFIT PERCENTAGE, THEY REDUCED THE DISABILITY AND SURVIVOR BENEFITS.

THEY HAD HIGHER CONTRIBUTIONS IN DROP, AND THERE WAS NO INTEREST IN DROP AND NO COLA.

SO THAT WAS WHAT WAS GOING TO HAPPEN WITH THE NEW TIER OF EMPLOYEES HIRED AFTER FEBRUARY 28TH, 2011, 2014.

I DON'T HAVE ON THE SLIDE, THEY DID ANOTHER PLAN AMENDMENT WHERE THEY CHANGED THE INTEREST RATE ON DROP.

I DIDN'T INCLUDE IT ON THE SLIDE BECAUSE IN 2017 ON THE NEXT SLIDE, THAT WAS WHEN WE HAD THE MASSIVE CHANGES THROUGH THE LEGISLATURE.

AND WHAT HAPPENED AT THIS TIME IS THE CHANGES IMPACTED NOT ONLY NEW EMPLOYEES, THEY IMPACTED EXISTING EMPLOYEES, RETIREES, BENEFICIARIES, AND ALL FUTURE EMPLOYEES.

THIS WAS HB 31 58.

BY DOING THESE CHANGES IN 2017, OUR LIABILITY IN THE PLAN WENT DOWN, UM, 18.6% OR A BILLION DOLLARS OVERNIGHT.

IT WASN'T AS PEOPLE RETIRED AND DIED AND LEFT THE PLAN, IT WAS, YOU KNOW, OVERNIGHT THE LIABILITY, UM, DROPPED.

AND I WANTED TO EXPLAIN THAT A LITTLE BIT.

SO WHAT HAPPENS IF YOU GO TO THE NEXT SLIDE, UM, IT'S A LITTLE BIT COMPLICATED, BUT TO TRY TO, AND I THINK YOUR QUESTIONS FROM THE LAST SESSION, WERE REALLY GETTING TO THAT.

SO REALLY THE DIFFERENCE BETWEEN HAVING A NEW TIER AND WHAT WE DID IN 2017 IS IF YOU, FOR A NEW TIER, YOU COULD HAVE AN EMPLOYEE THAT STARTS IN 2000, LET'S SAY.

AND THEY WORK HERE FOR 10 YEARS.

AND AT THAT TIME, THEY WERE GETTING A 3% MULTIPLIER.

WHEN WE HIRE HAD THE NEW TIER IN 2011, THAT EMPLOYEE THAT STARTED IN 2000 IS STILL GONNA GET THAT 3% MULTIPLIER.

THE HIGHER, HIGHER AVERAGE COMP PAY, ALL OF THAT, THEIR BENEFIT DID NOT CHANGE AT ALL.

BUT WHAT HAPPENED IN 2017 IS ALL OF THOSE PLAN CHANGES ALMOST IDENTICAL TO WHAT HAPPENED TO THE, THE 2011 TIER.

WE'RE NOW PUT ON TO ALL THE EXISTING EMPLOYEES FOR ALL FUTURE SERVICE.

SO, UM, AFTER 8 1 8 31 20 17, BEGINNING 9 1 17, THE MULTIPLIER FOR EXISTING EMPLOYEES, FOR THAT EMPLOYEE THAT WAS HIRED IN 2000 DROPPED THEIR AVERAGE COMP PAY INCREASED, THEIR MAXIMUM BENEFIT DECREASED.

SO THAT'S WHY IT HAD SUCH A DRAMATIC IMPACT, BECAUSE IT DIDN'T IMPACT, IT DIDN'T WAIT REALLY FOR A TIER OF EMPLOYEES TO RETIRE AND THEN PASS AWAY AND YOU STOP PAYING AND IT, IT IMPACTED EVERYBODY.

SO JUST TO GO THROUGH, UM, SOME OF THE MAJOR BENEFIT CHANGES, SO YOU CAN GET AN IDEA, I HAVE JUST TWO PAGES OF HIGH LEVEL CHANGES.

THERE WERE CHANGES THROUGHOUT

[01:15:01]

THE PLAN AND THE BENEFIT STRUCTURE, BUT THE NORMAL RETIREMENT AGE, IF YOU WERE HIRED BEFORE 2011, UM, WAS 50.

NOW IT'S 58 TO, SO TO GET THE HIGHEST MULTIPLIER, REGARDLESS OF WHEN YOU WERE HIRED, YOU HAVE TO BE 58.

UM, IF YOU WERE HIRED AFTER 3 1 20 11, IT WAS 55.

NOW IT'S 58.

THE, THE BENEFIT MULTIPLIER WAS 3% FOR, AND AND I'M GONNA TALK MOSTLY ABOUT THOSE EMPLOYEES HIRED BEFORE 2011, BECAUSE AS I SAID, MOST OF THE 2011 CHANGES FOR THOSE PEOPLE KIND OF WERE CARRIED OVER INTO 2017.

BUT EMPLOYEES THAT WERE HIRED BEFORE MARCH 1ST, 2011, USED TO HAVE A 3% MULTIPLIER.

THEIR MULTI HIGHEST MULTIPLIER WENT TO TWO AND A HALF STARTING FOR EVERY DAY THAT THEY WORK AFTER 9 1 17.

AND I KNOW THIS IS, UM, PROBABLY TOO BASIC, BUT GOING FROM A TWO AND A HALF PERCENT MULTIPLIER TO A 3% MULTIPLIER ISN'T A HALF PERCENT CHANGE.

THAT'S A 16.67% REDUCTION IN YOUR BENEFIT.

'CAUSE ONE HALF PERCENT OF 3% OF 16 AND A HALF.

SO, YOU KNOW, THEIR, THEIR WHAT THEY EARN, WHAT THEIR PENSION WAS VALUED FOR EACH DAY OF SERVICE WAS 16.67% LESS.

JUST FROM THAT ONE CHANGE FROM ONE DAY TO THE NEXT.

UM, THE AVERAGE COMP PAY WAS 36 MONTHS FOR BEFORE 9 1 17 TIME.

AND THEN IT GOES TO 60 MONTHS AFTER 9 1 17.

WE CALCULATE THE BENEFIT.

WE ACTUALLY DO IT IN TWO PARTS.

WE CALL IT THE BIFURCATED BENEFIT.

THE MAXIMUM BENEFIT YOU COULD RECEIVE USED TO BE 96%.

NOW IT'S 90%.

AND THE, UM, BENEFIT DOESN'T INCLUDE, UM, OVERTIME THE COST OF LIVING ADJUSTMENT PRIOR, IT WAS A 4% SIMPLE COLA AND NOW IT'S A COLA.

UM, THAT'S REQUIRES THE FUNDING LEVEL OF THE PLAN TO BE AT LEAST 70%.

PLUS YOU HAVE TO MEET THE ASSUMED GREATER RETURN FOR A ROLLING PERIOD OF TIME.

AT THIS TIME, WE'RE NOT PROJECTED TO HAVE A COLA FOR 50 YEARS UNLESS THE FUNDING OF THE PLAN CHANGES.

WE HAD A BENEFIT SUPPLEMENT, WHICH IS 3%.

UM, ADD-ON TO THE BENEFIT.

IF YOU HAD, IF YOU WERE OVER 55, THE CHANGE IN 2017 TOOK THAT AWAY UNLESS YOU ALREADY HAD IT.

WE DIDN'T TAKE IT AWAY FROM ANYBODY, BUT NOBODY KNEW WE'LL GET IT IN THE FUTURE.

SO THAT WENT AWAY.

DROP WAS CHANGED DRAMATICALLY.

IT'S NO LONGER A BENEFIT TO BE IN DROP.

THE ONLY TIME PEOPLE JOIN DROP NOW IS IF THEY'VE MAXED OUT THAT 90%.

UM, AND THAT'S A FINANCIALLY CORRECT THING FOR THEM TO DO, IS TO NOT JOIN DROP EARLY.

THE EMPLOYEE CONTRIBUTION RATE WENT FROM EIGHT AND A HALF PERCENT IF YOU WEREN'T IN DROP AND 4% IF YOU WERE TO 13.5% FOR EVERYBODY.

SO IT WAS JUST A DRAMATIC CHANGE FOR ACTIVE EMPLOYEES THAT ARE STILL WORKING THROUGH THE SYSTEM AS WELL AS THE BENEFITS SUPPLEMENT AND THE COLA IMPACTED RETIREES AND BENEFICIARIES.

SO I WANTED TO TURN OVER TO JOSH, UM, FOR A MINUTE JUST TO TALK ABOUT THE, UM, THE LITIGATION THAT WE EXPERIENCED RELATED TO SOME OF THE PLAN CHANGES THAT WE TALKED ABOUT.

THANKS, KELLY.

APPRECIATE THE OPPORTUNITY TO ADDRESS THE COMMITTEE.

SO, UM, THE, THE LITIGATION THAT HAS BEEN, THAT'S GONE ON OVER THE YEARS, THERE'S BEEN A NUMBER OF CASES AND BEEN ASKED ABOUT IT A LOT.

UH, GIVE YOU A LITTLE BACKGROUND ON PENSION LAW IN TEXAS.

SO THE FIRST BULLET YOU SEE A IS TRAMMELL.

AND THAT'S A 1930S CASE FROM, UH, THE CITY OF DALLAS WHERE A POLICE OFFICER, A RETIRED POLICE OFFICER, HAD HIS PENSION CUT AND THE HE SUED.

AND THE CASE WENT TO THE TEXAS SUPREME COURT.

AND WHAT THE TEXAS SUPREME COURT HELD IS THAT A PENSION IS A MERE EXPECTANCY.

SO IN OTHER WORDS, YOU CAN, THE THE LAW, THE HOLDING OF THAT CASE IS THAT A PENSION COULD BE CUT.

WHAT YOU MIGHT BE SURPRISED TO FIND OUT IS THAT IS STILL THE LAW IN THE STATE OF TEXAS.

SO, AS AN EXAMPLE, AND WHILE THEY THERE, THERE ARE SOME ARGUMENTS AGAINST IT.

THE TEACHER'S RETIREMENT SYSTEM OF THE STATE OF TEXAS, THE EMPLOYEE'S RETIREMENT, UH, SYSTEM OF THE STATE OF TEXAS, THE TEXAS MUNICIPAL RETIRES RETIREMENT SYSTEM, ALL THOSE PLANS ARE STILL UNDER THIS, THIS HOLDING IN TRAMMELL THAT THEIR BENEFITS COULD BE CUT.

NOW, EVENTUALLY OVER THE YEARS, THIS WAS, THIS LED TO THE AMENDMENT IN THE TEXAS CONSTITUTION, UM, ARTICLE 16, SECTION 66, WHICH ALLOWED CITIES TO OPT OUT OF IN, IN EFFECT THE TRAMMELL CASE IN PART.

AND SO, UH, THE CITY OF DALLAS IN 2004, THE COUNCIL VOTED AND THE VOTERS APPROVED, UM, OPTING INTO THIS SECTION, UH, SECTION 66 OF THE TEXAS CONSTITUTION, WHICH PROTECTS ACCRUED BENEFITS.

SO THAT WAS A SIGNIFICANT PROTECTION, WHICH IN MY VIEW, ALTHOUGH I HAD AN INTERESTING EXCHANGE MANY YEARS AGO WITH ONE OF THE FORMER CITY ATTORNEYS, I THINK IT COVERS EVERY SINGLE EMPLOYEE, UH, UH,

[01:20:01]

EVERY SINGLE PERSON EMPLOYED BY THE CITY OF DALLAS, WHETHER THEY'RE MUNICIPAL EMPLOYEES OR SWORN OFFICERS.

SO THAT'S THE BACKGROUND OF PENSION SORT OF LAW BEFORE ALL OF OUR CASES STARTED.

AND I WILL SAY THAT FOR BETTER OR FOR WORSE, UH, TEXAS PENSION BENEFIT LAW IS NOW REALLY ALL OF THE CASES RELATE TO DALLAS POLICE AND FIRE.

SO THE FIRST CASE THAT CAME, AND I'LL ALSO SAY THAT BEHIND ME ARE, I GUESS I WOULD CALL THEM THE LOYAL OPPOSITION.

THERE'S A NUMBER OF RETIRED POLICE OFFICERS AND FIREFIGHTERS WHO ARE PARTS OF GROUPS THAT HAVE BROUGHT CASES I BEAR NO ILL WILL TO THEM.

I I LIKE THEM, I SAY HI TO THEM, I JOKE WITH THEM, I UNDERSTAND WHY THEY'VE DONE THAT.

CERTAINLY THAT'S THEIR ABSOLUTE RIGHT TO DO THAT.

UM, AND SO THEY'VE BEEN A PART OF, AND, AND I WILL SAY INTERESTED IN AND ATTENDED HEARINGS AND SO ON.

SO THEY'VE, THEY'VE BEEN ACTIVE PARTICIPANTS IN THIS LITIGATION ON THEIR OWN BEHALF AS WELL AS THEIR, THEIR FELLOW RETIRED OFFICER'S BEHALF.

SO THE FIRST CASE THAT WAS LITIGATED WAS IN 2014.

IT WAS A CASE CALLED EDINGTON.

UM, IN 2014, UH, THE PENSION SYSTEM REDUCED THE AMOUNT THAT WAS CREDITED TO DROP ACCOUNTS.

UM, THE TEXAS SUPREME COURT EVENTUALLY HELD THAT THAT WAS ALLOWED UNDER, UM, THE TEXAS CONSTITUTION BECAUSE THE, THE IDEA WAS THAT IT WAS FUTURE ACCRUALS WERE NOT PROTECTED, BUT EVERYTHING UP TO A CERTAIN POINT IN TIME, UH, WAS THAT WAS ACCRUED, WAS PROTECTED.

UM, THE NEXT CASE, WHICH CAME OUT OF SOME OF THE CHANGES THAT KELLY DISCUSSED IN 2017 WAS, UH, THE ANNUITIZATION OF DROP ACCOUNTS.

SO WHAT HAPPENED IN, UH, THE 2017 LEGISLATION IS DROP ACCOUNTS WERE BASICALLY FROZEN.

AND THE LEGISLATION SAID THAT EVERY DROP ACCOUNT THEN WAS TO BE ANNUITIZED BASED ON THE HOLDER'S EXPECTED LIFE, UM, LIFETIME THROUGH A MORTALITY TABLE.

AND SO IT WAS AMORTIZED, PART OF IT WAS AMORTIZED WITH INTEREST.

PART OF IT WAS NOT DEPENDING ON, ON, UM, WHEN THE PERSON RETIRED AND, UM, AND HOW MUCH WAS IN THE DROP ACCOUNT.

BUT THE BOTTOM LINE WAS ALL DROP ACCOUNTS, UM, FOR RETIREES WERE ANNUITIZED AND CONTINUED TO BE ANNUITIZED WHEN PEOPLE WERE RETIRED.

THE TEXAS SUPREME COURT AGAIN FOUND THAT THAT WAS A CONSTITUTIONAL CHANGE, THAT, THAT, THAT, THAT LEGISLATION WAS IN FACT, UH, LEGAL.

UM, THE CASE THAT'S CURRENTLY PENDING IN THE COURT OF APPEAL IN THE FIFTH, UH, COURT OF APPEALS HERE IN DALLAS IS A CASE THAT WAS BROUGHT BY THE DALLAS POLICE RETIRED OFFICERS ASSOCIATION, IN WHICH THEY CHALLENGED CHANGES TO THE 2017 LEGISLATION WHERE THE, THE ONES THAT KELLY DESCRIBED RELATING TO THE COLA AND ALSO THE BENEFITS SUPPLEMENT.

UM, BASICALLY AGAIN, THE LEGISLATION MAKES IT, UM, EFFECTIVELY TO THE POINT WHERE NEW COLA INCREASES HAVE NOT OCCURRED SINCE 2017 AND, UH, ARE NOT EXPECTED TO OCCUR FOR 40 OR 50 YEARS UNTIL THE FUNDING LEVEL INCREASES.

SO TO BE CLEAR, THE LEGISLATION DID NOT TAKE AWAY PRIOR INCREASES IN BENEFITS WHERE COLAS WERE GRANTED.

BUT IT SAID, YOU, WE, YOU CANNOT GRANT FUTURE INCREASES UNTIL, UM, UNTIL YOU GET TO A CERTAIN FUNDING LEVEL.

SO, UH, THE DISTRICT COURT HELD THAT, UH, UH, HELD THAT THAT IN FACT WAS, UH, CONSTITUTIONAL, THAT IT WAS LEGAL AND THE CASE IS NOW PENDING IN FRONT OF THE, UM, FIFTH COURT OF APPEALS.

SO THESE ARE SOME OF THE CASES DEALING WITH HOW BENEFITS CAN BE ADJUSTED HERE IN THE STATE OF TEXAS.

UM, I THINK THEY'RE INTERESTING BECAUSE CERTAINLY WITH RESPECT TO D P F P, AT LEAST, UM, THE STATUTE THAT, UH, WE ARE OPERATING UNDER, WHERE THE ACTUARY CHIRON IS NOW DOING AN ANALYSIS TO SEE, UM, WHAT BENEFIT CHANGES SHOULD BE MADE, AS WELL AS WHAT CONTRIBUTION CHANGES SHOULD BE MADE.

UM, THEY UNDERSTAND THAT THERE ARE LIMITATIONS WITH RESPECT TO WHAT KIND OF BENEFIT CHANGES THEY CAN MAKE JUST FROM THE LEGAL PERSPECTIVE.

NOW, THEY HAVE NOT COME BACK TO ME AND ASKED ME ANYTHING.

THEY MIGHT OR MAY NOT.

BUT, UM, I THINK IN, IN PRELIMINARY DISCUSSIONS WITH THEM, THEY CERTAINLY ARE, HAVE A GOOD UNDERSTANDING OF WHAT THEY COULD RECOMMEND THAT WOULD LIKELY BE LEGAL AND NOT LEGAL.

OKAY.

THE NEXT SLIDE, THIS IS INFORMATION THAT YOU SAW A COUPLE OF WEEKS AGO, BUT JUST TO REMIND YOU, WE HAVE AN ACCRUED, UM, ACTUARIAL LIABILITY OF 5.2 BILLION IN 2.2 BILLION IN ASSETS.

THIS WAS AS OF 1 1 20 22.

SO IT'S PRETTY DATED INFORMATION.

SO A $3 BILLION LIABILITY OR 41% FUNDED, WHICH IS NOT WHERE, WHERE ANYBODY WANTS TO BE.

OUR PROJECTED FULL FUNDING YEARS IS 68.

[01:25:01]

AND AS YOU HEARD, UM, WE NEED TO BE 30 YEARS OR UNDER.

UM, AND AGAIN, WE'RE NOT PROJECTED TO HAVE A COLA UNTIL OCTOBER 1ST, 2073 AT THE CURRENT RATE IF ALL OF OUR ASSUMPTIONS ARE MET.

UM, ON THE NEXT SLIDE, I HAVE SOME STATISTICS.

OUR ACTUARIAL, THE CITY'S ACTUARIALLY DETERMINED CONTRIBUTION AMOUNT TO BE FUNDED IN 23 YEARS IS 52.3%.

I'LL EXPLAIN THE 22 YEAR.

THE 23 YEARS.

SO A FEW YEARS AGO IN 2000, THE P R B REQUIRED THAT ALL PLANS ADOPT A FUNDING POLICY AND IT HAD TO MEET THEIR GUIDELINES AND AT THE TIME HAD TO BE A CLOSED FUNDING PERIOD AND HAD TO BE UNDER 25 YEARS.

SO IT WAS TWO YEARS AGO.

WE'VE HAD TWO YEARS FROM NOW, IT'S 23 YEARS WHEN THE ACTUARY OR INDEPENDENT ACTUARY COMES BACK, UM, WITH AN ANALYSIS LATER, IT'LL BE BASED ON 30 YEARS.

BUT THIS IS THE ONLY NUMBER THAT I HAVE RIGHT NOW.

SO TO BE FUNDED WHERE WE NEED TO BE UNDER THE FUNDING POLICY, WHICH THE CITY PARTICIPATED IN AS WELL, ALSO IS 52.3%.

THE CITY'S CONTRIBUTION RATE FOR 2022 WAS 36.71%.

THAT'S 34.5% OF COMP PAY PLUS AN ANNUAL $13 MILLION ADJUSTMENT.

AFTER 2024, THAT $13 MILLION GOES AWAY AND IT'LL BE 34.5%.

THE EMPLOYEES CONTRIBUTE 13.5% AND THE NORMAL COST OR THE VALUE OF THEIR PENSION FOR EMPLOYEES HA HIRED AFTER 3 1 20 11 IS, UM, 15.59%.

THAT MEANS THE CITY'S CONTRIBUTION, ALL OF ALL THAT REALLY, THE 52% THAT NEEDS TO GO IN, ONLY 2% OF THAT IS GOING TOWARDS THE EMPLOYEES AND THE EMPLOYEES PAYING THE REST.

IF YOU TAKE ALL OF THE EMPLOYEES TOGETHER, INCLUDING THE HIGHER BENEFITS BEFORE 9 1 17 THAT THE EXISTING EMPLOYEES HAVE, UM, THE AGGREGATE AMOUNT IS 17.09%, WHICH WILL DECREASE OVER TIME.

THE NEXT SLIDE, YOU SAW THIS A COUPLE WEEKS AGO, IT'S JUST THE PATH OF OUR FUNDING ON OUR CURRENT PROJECTION, WHICH IS OBVIOUSLY VERY RISKY AND NOT WHERE WE WANNA BE.

THE NEXT SLIDE, UM, WE ALSO TALKED ABOUT AT THE LAST, UH, MEETING, THIS IS THE STATUTORY REQUIREMENT THAT'S IN OUR STATUTE.

YOU, YOU HEARD ABOUT THE F SS R P REQUIREMENT THAT THE P R B HAS FOR ALL PENSIONS.

IT ACTUALLY RUNS CONCURRENT WITH OUR OWN REQUIREMENT HERE.

SO I DON'T REALLY TALK MUCH ABOUT THAT BECAUSE IF, IF WE MEET OUR D P F P SPECIFIC STATUTORY, UM, MANDATE, WE'LL MEET THE F F SS R P GUIDELINE.

SO WE'RE MOVING FORWARD WITH THAT IN UM, NOVEMBER.

THE INDEPENDENT ACTUARY WILL HAVE PRELIMINARY INFORMATION BASED ON THE VALUATION THAT WE HAVE NOW.

UM, SO WE WILL GET THAT INFORMATION, I BELIEVE PROBABLY THE SAME DAY THAT YOU WILL TO SEE WHAT THEY THEY'RE SEEING AND WHAT THEIR RECOMMENDATIONS ARE.

SO WITH THAT, I'M HAPPY TO ANSWER ANY QUESTIONS.

UM, BEFORE I TURN THE QUESTION, QUESTION ON PAGE NINE, UM, THE UNFUN LIABILITY AND THIS, THIS ADDS, UM, 1, 1 20 22, WHAT WAS THE UNFUN LIABILITY IN 2017? DO YOU KNOW? IN 2017? YES, I DO KNOW THE ANSWER TO THAT QUESTION.

UM, THE UNFUNDED LIABILITY WAS ROUGHLY $4.4 BILLION.

NO, NO, I'M SORRY, 5.4 AND IT WENT DOWN.

OKAY, LEMME GET THESE NUMBERS RIGHT.

I DON'T HAVE IT WITH ME, BUT IT, IT DROPPED A BILLION DOLLARS.

SO THE TOTAL LIABILITY WAS 5.4 BILLION.

IT WENT TO 4.4 BILLION.

BUT SINCE THAT TIME WE HAVE HAD BENEFIT OUTFLOWS, WE'VE ALSO LOWERED OUR ASSUMED RATE OF RETURN.

SO THAT'S SOME OF THE CHANGE HERE.

AND ALSO, WHAT WAS THE MARKET VALUE ASSET AT THAT TIME IN 2017? I DON'T RECALL THAT NUMBER, BUT I CAN GET GET THAT NUMBER BACK TO YOU.

UH, JACK, UH, MS. MS. ALLEN, JACK, CAN YOU HEAR ME? UH, I ASKED SOME QUESTION TO YOU.

DO YOU GIVE THOSE QUESTIONS TO THE PENSION? THE ONE I FORGOT, THE ONE I ASKED YOU TO PREPARE YESTERDAY? NO, NO SIR.

WE WERE GONNA GET WITH THAT TODAY.

OKAY.

SO SORRY, WE DON'T HAVE THAT FOR YOU TODAY.

OKAY.

MAYOR PROAM, I FOUND THE NUMBER FOR YOU.

UM, IN, IN 2017, THE MARKET VALUE OF ASSETS WAS 2,000,150,000.

OKAY? I MEAN, YEAH, 2,150 MILLION.

OKAY? AND I KNOW THIS INFORMATION, UM, AND I KNOW MS. MS. BLACKBURN WAS THERE IN 2013 AND, AND PART OF WITH, UM, LARRY CASTRO IN 2017 WHEN HE WENT DOWN TO THE STATE.

I'M JUST CURIOUS, WE ARE IN 2023 AND FROM 17 WE KNEW THAT WE HAD TO COME WITH A PLAN BY 2024.

IN THE MEANTIME, THE HISTORY HERE, WHAT DID THE PENSION DO

[01:30:02]

THE, IN THESE LAST SIX YEARS? SO YOU'RE CORRECT, SIR, THAT WE DID KNOW IN 2017 THAT THE SOLUTION THAT THE LEGISLATURE ADOPTED WAS A BRIDGE TO, TO BUY TIME TO GET TO A PERMANENT SOLUTION.

SO SINCE THAT TIME, UM, THE BOARD THAT WAS PUT IN PLACE, WELL IMMEDIATELY THEY HAD I THINK OVER 30 REQUIREMENTS IN THE, IN THE STATUTE THAT THEY HAD TO DO, THEY HAD TO SET UP THE DROP ANNUITIZATION RULES AND THE HARDSHIP RULES, AND THEY DROP UNDUE RULES AND THEY HAD TO DO SEVERAL DIFFERENT STUDIES AND THEY DID ALL OF THAT.

BUT PRIMARILY WHAT THE BOARD HAS WORKED ON, UM, I WOULD SAY 70% OF THEIR TIME HAS BEEN TRANSFORMING OUR UNDERPERFORMING INVESTMENT PORTFOLIO.

WE WERE OVER ALLOCATED TO UNDERPERFORMING, UM, PRIVATE ASSETS, WHICH WE KNEW IN 20 15, 20 16 THAT WE HAD THAT PROBLEM.

BUT IT'S TAKEN A LONG TIME AND WE'RE STILL WORKING THROUGH THAT.

SO THAT'S BEEN A DRAG ON OUR FUND, UM, OVER TIME IS SELLING THESE ASSETS IN A RESPONSIBLE WAY SO IT'S NOT A FIRE SALE AND WE'RE NOT TAKING BIGGER LOSSES THAN WE NEED TO.

AND, AND THE BOARD HAS SPENT A LOT OF TIME DOING THAT.

AND SO IN 17 TODAY, HOW MANY TIMES HAVE THE PENSION SYSTEM BRIEFED THE COUNCIL FROM 17 UP TODAY? HOW MANY TIMES HAS THE PENSION BRIEFED THE FULL CITY COUNCIL, UH, COMMITTEE? I, UH, SIR, I'M NOT SURE I KNOW THE EXACT DATE, BUT I DO KNOW ON AN ANNUAL BASIS WE COME AND WE TALK TO THE, UM, THE GOVERNMENT COMMITTEE ABOUT THE BUDGET AND WHERE WE ENDED THE PRIOR YEAR.

SO WE HAVE COME ON VARIOUS OCCASIONS.

I DID COME LAST YEAR, I BELIEVE IT WAS IN NOVEMBER, AND BRIEF THE COMMITTEE ON THE STATUS OF THE FUND.

I THINK IT ALSO NOTE THAT I DON'T THINK WE'VE EVER TURNED DOWN ANY REQUESTS OF THE CITY TO COME TO A COMMITTEE OR TO THE FULL WELL, I, I, I'M, THAT'S, THAT WAS NOT MY QUESTION.

MY QUESTION WAS HOW MANY TIMES HAVE YOU BRIEFED THE COUNCIL? AND, AND I JUST WANNA MAKE SURE TO GET MY POINT ACROSS THAT FOR SIX YEARS FROM 2017, 2023, WE KNOW WE HAD THIS PROBLEM.

WE KNEW WE HAD A PROBLEM IN 2013, WHILE WAS THE BOARD, WHILE WAS THE TRUSTEE ON THE BOARD.

I UNDERSTAND, I UNDERSTAND THE ACTUARY.

I JUST WAS CURIOUS, YOU KNOW, FROM MY CURIOSITY THAT FOR SIX YEARS, WHAT HAVE WE BEEN DOING? I KNOW WE GOT A BIG GAP HERE.

WE, THE CITY COUNCIL, WE THE TAXPAYER, WE GOTTA FIX THIS.

WE GONNA MAKE SURE THAT THOSE UNIFORM OFFICERS, WHEN THEY RETIRE, THEY GOT A CHECK IN THE MAIL, THEY CAN CASH THEIR CHECK.

THAT'S THE MAIN CONCERN TO ME.

BUT ALSO I GOT A COMMITMENT TO THIS COUNCIL HERE TO FIND OUT WHAT CAN WE DO, HOW CAN WE GO ABOUT IT, DO IT THE RIGHT WAY.

BUT I'M, I'M, I'M KIND OF DISAPPOINTED FOR SIX YEARS NOTHING HAD HAPPENED TO THE POINT WITH DOLLARS.

YOU KNOW, HOW DO WE FORECAST, HOW ARE WE GONNA PAY IT? YOU KNOW, DO WE, DO WE REDUCE THE TAX RATE? HOW DO WE BENEFIT, HOW DO WE PUT A PROPOSAL TOGETHER THAT WE KNOW IN 2024 WE GOTTA COME WITH A PLAN? AND RIGHT NOW I'M, I'M SITTING HERE AT THE CHAIR AND I GOTTA COME WITH A PLAN IN LESS THAN 12 MONTHS.

AND WE HERE AT THIS COMMITTEE, RIGHT HERE IS OUR RESPONSIBILITY AND TAX OWNER.

WHAT IS OUR PLAN GONNA BE? YOU KNOW, AND HOW CAN WE GET THAT? I'M TRYING TO DIG FOR ALL THE DUE DILIGENCE, I'M ASK FOR THE ACTUARIES TO MAKE SURE THEY GET THEIR PROPER INFORMATION.

BUT THE ACTUARY CANNOT DO ANYTHING UNLESS THEY GOT ALL THE PROPER DATA.

THE DATA AND MAKE SURE THAT DATA IS CORRECTED.

MM-HMM.

, IN THE PAST WE HAD ACTUARIES THAT DID NOT HAVE CORRECT DATA TO, TO MOVE THIS FORWARD.

THAT'S HOW WE GOT HERE IN THE FIRST PLACE.

BUT ALSO, I GOT RETIRED POLICE OFFICER GONNA RETIRE.

I GOT PEOPLE SITTING HERE CALLING ME AND SAYING, HEY, WHAT WE GONNA DO? YOU KNOW, DO WE DO A FIRE SALE? WHAT WE GONNA DO? I, I DON'T WANT TO GET INTO THE FIRE SALE.

I WANNA GET INTO TO RESOLVE THIS.

MY RESPONSIBILITY AND MY COMMITMENT.

WE GONNA HAVE SOME KIND OF PLAN BEFORE THE END OF YEAR, BEFORE CRYSTAL.

WE GONNA HAVE SOME KIND OF PLAN BEFORE THE END OF YEAR BECAUSE SIX YEARS IS TOO LONG.

IF SIX, TWO YEARS, SIX YEARS IS TOO LONG FOR SOMEONE HAD THAT DOUBT OUT THERE, WE GONNA HAVE STUDY GROUP, WE GONNA ANALYZE THIS.

WE GOT XRAYS COMING IN AND I BELIEVE WE GOT XRAY COMING IN IN NOVEMBER.

IS THAT CORRECT, JACK? WHAT DATE THEY COMING IN? THE NINTH.

THE NINTH.

NOVEMBER THE NINTH.

SO, SO COLLEAGUES, WE GOT ANOTHER BRIEFING COMING HERE.

SO CLEAR YOUR SCHEDULE AND I KNOW MS. MILLS, YOU SAY THREE O'CLOCK, YOU'RE GONNA BE AT THREE O'CLOCK.

AT ONE O'CLOCK ON NOVEMBER 9TH.

Y'ALL KNOW WE'RE GONNA BE IN THIS ROOM HERE FOR THE ARI.

THEY'RE GONNA BRIEF Y'ALL, I THINK THE EIGHTH BEFORE THEN.

SO WE NEED TO FIND OUT WHAT THAT DATA IS SO WE CAN GET UPSET WITH HER.

UH, UH, ANOTHER THING, UH, MS. BLACKBURN, SO I'M GONNA ASK YOU TO DO A FAVOR FOR ME.

UH, UH, PROBABLY BETWEEN NOW AND THE NINTH, UH, BECAUSE

[01:35:01]

YOU WAS HERE IN 2013 AND YOU WAS HERE WITH PART OF THIS, UH, GOING DOWN TO AUSTIN, TEXAS 2017.

I WANT YOU TO PICK TWO, TWO MEMBER OF THIS COMMITTEE TO WORK WITH YOU AND GET WITH JACK AND FIND OUT WHAT A DUTY'S GONNA BE.

BECAUSE WE ARE GONNA CORRECT THIS AND FIX THIS BEFORE THE END YEAR.

WE HAVE SOME KIND OF PLAN.

WE'RE NOT GONNA WAIT NEXT YEAR.

WE DON'T HAVE A PLAN WITH THAT.

I'M GOING TURN INTO MY FAVORITE COUNCIL MEMBER MIDDLETON, 'CAUSE SHE MISSED HER R T C MEETING AND I HOPE THEY DID NOT HAVE NO VOTE TO TRY TO TAKE SOME MONEY FROM US.

TWO QUESTIONS, THEN WE GO AROUND.

OH, HOLD ON.

SORRY.

MS. MILLER RE DAY WAS, THEY NEVER HAD A CHANCE TO ASK ANY, ANY QUESTIONS.

SO, JESSE, WILL YOU PLEASE, UH, CHAIRMAN.

SORRY.

THANK YOU CHAIRMAN.

UH, THANK YOU FOR, FOR THE PRESENTATION THAT ONE EARLIER AS WELL.

UM, I'M GOOD RIGHT NOW.

I'M GONNA LET UH, MENDELSSOHN GO AHEAD, BUT THANK YOU.

THANK YOU CHAIRMAN.

SEE, OKAY, SO, UM, I JUST WANNA SAY MAYOR PERAM, I APPRECIATE HOW SERIOUSLY YOU'RE TAKING THIS.

UM, THE LEGISLATION THAT WAS PASSED IN 2017 THOUGH, DIDN'T LET US DO ANYTHING UNTIL THE NEXT LEGISLATIVE SESSION IN 2025.

IS THAT CORRECT? NO, IT DIDN'T.

THERE WERE SOME PROVISIONS IN THERE THAT I THINK COULD HAVE HAPPENED SUCH AS, UM, I THINK WITH AGREEMENT BETWEEN THE BOARD OF D P F P AND THE CITY COUNCIL, THE CITY COULD HAVE INCREASED THE CONTRIBUTIONS, BUT, UM, I DON'T THINK ANYBODY WANTED TO DO THAT AT THAT TIME.

THEY WANTED TO SAY LET'S, YOU KNOW, THERE'S A PROCESS IN PLACE.

LET'S SEE HOW THAT WORKS OUT.

AND IS IT YOU THAT WOULD'VE TOLD US THE CONTRIBUTION NEEDS TO BE INCLUDED OR WOULD THAT HAVE BEEN CITY STAFF TELLING COUNCIL? OR WOULD THAT HAVE BEEN COUNCIL WAKING UP ONE MORNING SAYING, HEY, WE NEED TO INCREASE THIS CONTRIBUTION.

WHERE, WHERE WOULD THAT COME FROM? SO ON AN ANNUAL BASIS WE WOULD PROVIDE THE ACTUARIAL EVALUATION AS WELL AS OUR AUDIT TO THE CITY STAFF.

AND WE WERE IN, UM, A GREAT COMMUNICATIONS WITH, UM, YOUR C F O AND THEN PRIOR TO MAYBE THE PANDEMIC, YOU HAD AN ACTUARY ON STAFF AND WE WORKED HAND IN HAND WITH HER.

SHE WAS ACTUALLY VERY, VERY HELPFUL TO US.

SO SHE WAS WELL AWARE OF THE ISSUES AND THE NEED.

UM, AND WE LOOKED AT THINGS.

I WORKED WITH, UM, HER AND ELIZABETH ON DEVELOPING THE FUNDING POLICY.

SO AT THAT TIME IN 2000 WE WORKED TOGETHER ON LET'S, WE NEED TO GET THIS FUNDED IN 25 YEARS.

AND THAT HAS A PROVISION IN IT THAT IF THE CITY'S CONTRIBUTION IS 2% LOWER THAN THE ACTUARY DETERMINED CONTRIBUTION FOR TWO VALUATIONS IN, IN A ROW, WE NEED TO NOTIFY THE CITY AND ASK FOR ADDITIONAL CONTRIBUTIONS, WHICH WE HAVE DONE.

AND WHEN YOU'VE ASKED FOR THOSE ADDITIONAL CONTRIBUTIONS, 'CAUSE 'CAUSE CERTAINLY, UM, I'VE BEEN ON THE G P F M COMMITTEE OR CHAIRED IT SINCE I'VE BEEN ELECTED AND YOU HAVE COME AND YOU HAVE SHOWED US THESE FRANKLY SHOCKING NUMBERS.

I MEAN, YOU KNOW, WE WERE SITTING OVER HERE GOING, OH MY GOODNESS, 2090 BEFORE YOU GET A COLA.

I MEAN WE SHOULD ALL BE SHOCKED.

WE SHOULD ALL SAY THIS IS UNACCEPTABLE.

BUT YOU'VE BEEN SHOWING US THESE NUMBERS, I'LL TELL YOU I DIDN'T UNDERSTAND THAT WE COULD CHANGE IT BEFORE 2025, BUT CERTAINLY WE PROBABLY SHOULD HAVE.

AND IT'S VERY CLEAR TO ME AND I HOPE THE REST OF THE COMMITTEE THAT THERE'S A SIGNIFICANT CHANGE IN CONTRIBUTION THAT HAS TO HAPPEN.

RIGHT.

CAN WE TALK ABOUT OVER TIME, YOU HAD BROUGHT THIS UP EARLIER, IS OVERTIME CONSIDERED IN THE PENSION CALCULATION? NO.

AND IT NEVER HAS BEEN FOR D P F P.

I CAN TELL YOU THOUGH, PRIOR TO 2017 THE CITY'S CONTRIBUTIONS DID INCLUDE OVERTIME.

THEY PAID CONTRIBUTIONS ON OVERTIME, BUT IT WAS NEVER CALCULATED INTO THE BENEFIT PAYMENT.

SO WE DON'T HAVE OVERTIME SPIKING, THEY ALSO AREN'T ALLOWED TO.

BUT YOU DO HAVE IT AS A CONTRIBUTION? NO, IN THE CITY WE NO LONGER HAVE IT AS A CONTRIBUTION.

BUT YOU USED TO BEFORE 2017? CORRECT.

OKAY.

ON THE CITY SIDE, WE ALSO DON'T ALLOW EMPLOYEES, UM, THEIR PENSION CALCULATION DOESN'T INCLUDE THEIR FINAL SICK LEAVE VACATION PAYOUT, WHICH HAPPENS IN SOME ORGANIZATIONS.

SO DO YOU KNOW WHAT THE CHANGE WOULD BE? I MEAN, WE HAVE A MASSIVE AMOUNT OF POLICE AND FIRE OVER TIME.

WE OFTEN HAVE DISAGREEMENTS ABOUT POLICE OVER TIME, ALTHOUGH RIGHT NOW I BELIEVE WE HAVE MORE FIRE OVERTIME THAN POLICE.

UM, WE'RE TALKING ABOUT HUNDREDS AND HUNDREDS OF MILLIONS OF DOLLARS.

SO DO YOU KNOW HOW THAT CHANGE ALONE, IF WE SWITCHED IT BACK WHERE THE CITY CONTRIBUTION DID INCLUDE OVERTIME, HOW THAT WOULD AFFECT, UM, THE, THE FUND?

[01:40:01]

I DON'T KNOW THE EXACT NUMBER, BUT THIS IS WHAT I DO KNOW.

UM, I HAVE LOOKED AT THE REPORTS THAT ARE AVAILABLE ONLINE AND I'VE LOOKED AT THE, THE UNIFORM OVER TIME FROM 2017 FORWARD AND I DON'T KNOW HOW, UM, IF I'M READING THOSE REPORTS EXACTLY RIGHT.

SO I NEED TO GET TOGETHER WITH TO JACK TO TALK ABOUT IT.

I DO THINK BECAUSE OF THE FLOOR THAT WE HAD IN PLACE UP UNTIL, UM, THIS YEAR AND THE $13 MILLION D P F P HAS BEEN GETTING A LITTLE MORE MONEY ANNUALLY THAN WE WOULD HAD WE NOT CHANGED THE 27.5% CONTRIBUTION RATE YOU HAD BEFORE WITH THE OVERTIME.

SO WE HAVE BEEN BENEFITING WHY HIGHER CONTRIBUTIONS, UM, WITH THE NEW STRUCTURE, BUT NOT TO THE MAGNITUDE THAT THAT IT WOULD SEEM.

UM, IF IT WAS 34.5%, INCLUDING OVERTIME, THAT WOULD MAKE A HUGE DIFFERENCE.

IT WOULDN'T GET US ALL THE WAY THERE, BUT IT WOULD GET US A LONG WAY THERE.

AND WE HAVE THREE QUESTIONS SO YOU CAN COME BACK.

WE GOT PLENTY TIME.

UM, LET'S GO CHAIRMAN STEWART, ANY QUESTION? OKAY.

CHAIRMAN WEST.

THANK YOU.

UM, I AGREE THAT SIX YEARS IS TOO LONG.

UM, I I'M NOT AS OPTIMISTIC AS THE CHAIR THAT WE'RE GONNA GET THIS FIXED BY DECEMBER, BUT I, I THINK THAT IT'S, FOR ME, I I, MY PERSONAL GOAL AT LEAST IS TO GET IT DONE BY THIS TERM.

LIKE HAVE OUR PATHWAY FORWARD.

UM, I I GUESS A COUPLE QUESTIONS.

UM, ONE IS WHEN DID, AND WHY DID IT CHANGE ON THE OVERTIME CALCULATION? WHAT YOU, YOU MENTIONED IT WAS 2021.

IT WAS PART OF THE 2017 LEGISLATION.

IT WAS THE LEGISLATION.

IT WAS THE LEGISLATION THAT CHANGED THAT.

OKAY.

SO WE DON'T HAVE THE POWER TO CHANGE THAT UNLESS IT GOES TO THE LEGISLATIVE TO, TO AUSTIN.

I MEAN THE, THE CITY COULD AGREE TO PAY ANY AMOUNT OF CONTRIBUTIONS THAT YOU WANT THAT ARE HIGHER THAN YOUR CURRENT CONTRIBUTIONS THROUGH MEET AND CONFER, I GUESS.

NO.

JUST YOU NO, NO, NO.

COULD MAKE A MOTION NEXT WEEK IF YOU'D LIKE.

YOU CAN DO, YOU DO WHAT YOU WANT TO DO.

I MEAN, THAT'S WHY I BROUGHT THIS HERE.

WE DIDN'T HAVE TO WAIT TILL THE LAST MINUTE TO FIGURE THIS OUT.

WE HAD TO COME WITH A PLAN THAT'S APPRECIATED.

AND I DON'T KNOW WHY WE WAITED SIX YEARS TO COME WITH A PLAN AND YOU GAVE IT TO ME AND, AND MISS IN IN, IN THE G F L.

YOU KNOW, YOU'RE ON THE BUDGET RIGHT NOW.

WE COULD CONTRIBU IT HERE, WE COULD'VE DONE THAT.

WE CAN RESIGN THIS WAY AHEAD OF TIME.

AND RIGHT NOW IT'S A FIRE SALE, YOU KNOW, AND RIGHT NOW I DON'T WANNA HAVE A FIRE SALE.

SO WE GOTTA BE VERY INTELLIGENT.

I THINK WE GOT EIGHT PEOPLE ON THIS COMMITTEE AND WE GOT ONE GOAL IS OUR GOAL IS NUMBER ONE, I THINK THE FIRE DEPARTMENT OF POLICE DEPARTMENT, THEY DON'T CARE.

THE CITY BURNED DOWN.

ONLY THING THEY WORRY ABOUT, ARE THEY GONNA GET THEY MONEY WHEN THEY RETIRE? ARE THEY MONEY? I GONNA BE ABLE TO CASH THAT CHECK WHEN THEY, WHEN THEY'RE GONNA RETIRE.

IT'S OUR RESPONSIBILITY AS A CITY COUNCIL HERE TO MAKE SURE WE PAY THE DEBT.

YOU AS THE PENSION BOARD, YOU ARE RECEIVING THE BENEFIT TO MAKE SURE THOSE EMPLOYEES, THOSE FIRE DEPARTMENT, THE POLICE DEPARTMENT GET THEIR RETIREMENT MM-HMM.

.

BUT IT'S YOUR RESPONSIBILITY TO GIVE US THE RIGHT DATA, THE RIGHT DATA, AND MAKE SURE WHAT IS OUR DEBT, WHAT IS WHAT A REAL DEBT.

SO WE CAN COME WITH SOME KIND OF HOW MUCH MONEY WE NEED TO PUT INTO THIS EVERY YEAR.

AND SO THAT'S WHY I GOT JACK HERE.

I'VE BEEN MEETING WITH HIM CONSTANTLY, BUT I'M JUST KIND OF DISAPPOINTED.

I I, MY FRUSTRATION WOULD ME FOR THE LAST MONTH WHEN I TOOK OVER THE POSITION, WHY WE WAIT SIX YEARS, YOU KNOW, WE DONE LOWER THE TAX RATE, WE DONE DID ALL OF THIS.

I MEAN MONEY WE COULD'VE SET ASIDE AND, AND DID DO THIS.

I MEAN THIS, THIS IS UNHEARD OF.

WELL, COUNCIL MEMBER, IF I MAY, UH, THE CHANGES WERE PUT IN PLACE AND THERE WAS A RUN, IF YOU WILL, ON THE BANK AT A TIME.

I REMEMBER THAT 600,000, $600 MILLION.

AND SO I THINK THERE WAS A, A NEED TO SEE HOW THINGS STABILIZED.

WE WERE WORKING ON INCREASING PAY FOR OFFICERS THROUGH MEET AND CONFER AGREEMENTS.

WE'VE BEEN WORKING ON INCREASING THE HEADCOUNT THROUGH, UH, ADDING STAFFING.

SO WE'VE BEEN DOING THINGS THAT WOULD SHORE UP THE FUND THAT WOULD IMPROVE THE FUNDS ASSETS AND CONTRIBUTIONS THROUGH, THROUGH PAY AND NUMBER OF OFFICERS.

SO WE NEEDED SOME TIME.

AND IT'S MY UNDERSTANDING THAT THE LEGISLATION DID REQUIRE THAT WE HAVE LIKE FIVE YEARS BEFORE THOSE CHANGES WERE MADE.

SO I DON'T THINK WE'VE SET BACK.

WE HAVE, WE HAVE CONTINUED TO MAKE THE CONTRIBUTIONS WE HAVE PUTTING IN $13 MILLION MORE THAN THE CONTRIBUTION RATE AS REQUIRED BY THE STATE LAW.

SO WE'VE BEEN FOLLOWING THE STATUTE AS LAID OUT AND ARE HERE PREPARED TO WORK WITH YOU AND YOUR COMMITTEE TO ENSURE THAT WE HAVE A PLAN IN TIME FOR THE 25 LEGISLATION THAT THE CITY COUNCIL, THE BOARD, THE ASSOCIATIONS ARE ALL IN AGREEMENT WITH.

'CAUSE WE ARE ALL TOGETHER, I THINK VERY COMMITTED TO MAKE SURE THE SUSTAINABILITY OF THE FUND AND, AND JACK AND, AND NOT TO CORRECT YOU, YOU'RE SMARTER THAN I.

UH, BUT NUMBER ONE, WE, UM, TOOK MONEY FROM THE CONTRIBUTION

[01:45:01]

IN OUR BUDGET ONE YEAR THAT WE SET ASIDE, YOU KNOW, TO DO, WE, WE, WE RE WE CUT MONEY.

WE REALLY DID.

WE TOOK MONEY, PUT IT SOMEWHERE ELSE.

SO WE DID, WE, I'M I'M TRYING TO MAKE SURE ON THE RECORD BECAUSE I WANNA MAKE SURE YOU CLEARLY UNDERSTANDING HOW SERIOUS I AM TO, TO FIX IT.

WE GONNA FIX IT.

BUT I THINK YOU'RE REFERRING TO, UH, LAST YEAR WE SET ASIDE $14 MILLION BECAUSE WE KNEW THIS WAS AN ISSUE AND WE WANTED TO START SITTING ASIDE AND COUNCIL MADE AMENDMENTS TO USE THAT FOR OTHER PURPOSES.

THAT'S CORRECT.

SO I WANNA PUT IT OUT THERE.

SO I I, YOU KNOW, I JUST ONE VOTE, BUT, BUT WE NEED TO FIX IT.

I'M SORRY, MR. WEST, CHAIRMAN WEST, GO AHEAD.

YOU'RE EXCITED.

I GET IT.

WE ARE, WE ALL ARE.

AND I WANT TO THANK THE ASSOCIATIONS AND THE RETIRED OFFICERS TOO FOR REALLY KIND OF PUTTING THE FIRE UNDER ME AND REALIZING, HEY, WE, WE CAN'T KEEP WAITING ON THIS.

UM, MY LAST QUESTION IS, UH, ON SLIDE NINE, I UNDERSTAND WHY THE FULL FUNDING'S IN 2090.

I, I GET THE REALITY OF THAT.

WHY IS THE FIRST COLA NOT UNTIL, UH, COST OF LIVING ADJUSTMENT, NOT UNTIL 2073? WHO, WHO DECIDED THAT? OR WHAT, WHAT'S THAT ABOUT? THAT IS THE ACTUARIAL CALCULATION OF WHEN IF WE MEET ALL OF OUR ASSUMPTIONS, WE WILL BE 70% FUNDED AND THEN THE BOARD CAN CONSIDER A COLA.

IT'S NOT AN AUTOMATIC COLA, BUT THAT, UNLESS THERE'S A, I MEAN THAT DATE WILL MOVE UP DRAMATICALLY IF, IF THERE'S A FUNDING INFUSION.

BUT RIGHT NOW THAT'S WHEN WE GET TO THE 70% MINIMUM FUNDING.

SURE.

I CAN'T IMAGINE.

I MEAN, I UNDERSTAND WHY IT'S HERE, BUT I CAN'T IMAGINE THAT IT'S REALISTIC.

I DON'T THINK THE OFFICERS WOULD STAND FOR THAT.

SO I CERTAINLY WOULDN'T.

UM, I THINK THAT'S IT.

AND FOR THE RECORD, I SUPPORTED PUTTING SOME OF THE BUDGET MONEY INTO THE PENSION.

I I GOT OUTVOTED ON THAT, SO THANK YOU.

OKAY.

UM, MR. COUNCIL WILLIS.

I THANK YOU.

SO, UM, DO WE HAVE ANY IDEA OF HOW MANY, UH, PEOPLE ARE RETIRING DISABLED? UM, WELL, LEMME SEE IF I CAN FIND IT REALLY QUICKLY.

THERE, THERE AREN'T VERY MANY.

NOT, I MEAN, THAT, THAT'S A VERY SMALL NUMBER AND HONESTLY THE REASON FOR THAT IS PRIOR WITH THE OLD DROP PROGRAM WAS SO BENEFICIAL.

PEOPLE WOULD DO ANYTHING THEY COULD NOT TO HAVE A DISABILITY.

SO WE DO EXPECT DISABILITIES TO INCREASE IN THE FUTURE, BUT WE DON'T HAVE A LOT OF DISABILITIES.

YOU'RE SAYING YOU DO EXPECT THAT BECAUSE THE DROP IS NOT AVAILABLE.

RIGHT.

OKAY.

I JUST, I THINK IN SOME OTHER MUNICIPALITIES IT'S HIGHER AND MAYBE 'CAUSE THE THRESHOLD OF DISABLED IS IS LOWER OR SOMETHING.

SO I JUST WAS CURIOUS WHERE DALLAS WAS.

YEAH, OURS IS EXTREMELY LOW COMPARED TO OTHERS.

OKAY.

WELL AND THAT'S GOOD TOO.

SO WE DON'T WANT PEOPLE TO BE HEARD.

UM, I TELL YOU WHAT ON THAT, I'LL, I'LL GO ON AND PASS IT OVER TO COUNCIL MEMBER BLACKMAN.

CHAIRMAN BLACKMAN.

UM, THANK YOU.

UM, BACK ON THE OVERTIME PAY, CAN YOU DO A COST BENEFIT ANALYSIS? I MEAN, WE KNOW IT'S GONNA COST SOME MONEY.

JUST WANNA KNOW WHAT IT, WHAT THAT IS AND WHAT DOES THAT BENEFIT THROUGH THE LONG TERM? SHORT, MIDTERM, LONG BECAUSE, UM, YOU KNOW, UH, I DO THINK THAT THAT IS AN OPPORTUNITY ON BOTH, NOT FOR THE BENEFICIARY, BUT ALSO THE, FOR THE CITY TO INCREASE THEIR CONTRIBUTION.

MM-HMM.

AND I WOULD LIKE TO SEE WHAT THAT ACTUALLY MEANS.

OKAY.

AND, UM, WE TALKED ABOUT, I THINK THE LAST TIME, UH, IN THE STUDY GROUP, THE PORT, UH, THE PORTFOLIO INVESTMENT.

UM, IS THERE ANY DISCUSSION ABOUT RECONFIGURING IT? ARE YOU GONNA STICK WITH THIS? THAT WAS ON, YOU KNOW, PAGE SIX.

I KNOW YOU'VE STILL GOT SOME REAL ESTATE THAT WE ALL KNOW ABOUT, THAT WE'VE READ ABOUT.

WHAT IS, AND I KNOW THAT, I DON'T KNOW IF THAT'S, UM, YOU KNOW, THAT Y'ALL TALK ABOUT IN PUBLIC OR IS THAT SOMETHING YOU GO IN CLOSED DOORS? 'CAUSE THAT IS KIND OF, UM, YOU KNOW, UH, PROPRIETARY.

SO JUST WHAT IS THE FUTURE FOR THE INVESTMENT PORTFOLIO? SO I CAN TELL YOU THAT THE ASSET ALLOCATION THAT THE BOARD HAS HAS 15% TO PRIVATE ASSETS.

AND THAT WOULD BE 5% IN NATURAL RESOURCES, 5% TO REAL ESTATE AND 5% TO PRIVATE EQUITY.

THE NATURAL RESOURCES THAT WE CURRENTLY HAVE IS ACTUALLY HISTORICALLY OUR BEST INVESTMENT.

SO THEY WILL KEEP THAT ONE.

THE REAL ESTATE AND PRIVATE EQUITY THAT WE HAVE, THE GOAL IS TO LIQUIDATE WHAT WE HAVE REMAINING AND THEN BUY NEW PERFORMING ASSETS.

BUT, UM, WE'VE GOT THREE LARGE, UM, INVESTMENTS THAT ARE STILL LEFT AND WE, WE CALL IT VERY LUMPY.

SO THEY'RE VERY MATERIAL, ONE OF 'EM IS VERY MATERIAL AND HOLDS UP OUR AUDIT EVERY YEAR.

AND WHEN THAT ONE, THAT IS AN INDIVIDUAL ASSET, WHEN THAT SELLS, THAT'LL BE A LARGE AMOUNT OF MONEY COMING BACK TO THE PENSION SYSTEM.

AND THEN THERE'S ANOTHER PRIVATE EQUITY FUND THAT'S ALSO BIG AND THEN THERE'S KIND OF A, A GROUP.

SO THERE'S KIND OF THREE GROUPS.

SO YOU'RE STILL WORKING THROUGH, WE'RE STILL WORKING, I DON'T WANNA CALL STABILIZING THE PORTFOLIO, BUT YOU'RE STILL WORKING IN, RIGHT, I GUESS BRINGING IT TO NORM, NORMALIZING IT.

WE ARE, WE'RE GOING TO GET RID OF THOSE

[01:50:01]

AND THEN BUY, UM, NORMAL PENSION, UM, INDUSTRY STANDARD TYPE PRIVATE ASSETS AND IN A SMALL AMOUNT.

MY LAST QUESTION FOR JACK, UH, I THINK WE GIVE 13 MILLION, IS THAT CORRECT? IN ADDITION TO THE 34%? YES MA'AM.

ADDITIONAL 13 MILLION.

BUT THAT'S JUST FOR SEVEN YEARS.

THAT, THAT'S MY QUESTION.

CAN THAT, IS THERE ANYTHING THAT PROHIBITS US FROM KEEPING, AT LEAST DOING THE BEAR OF KEEPING THAT 13 OR EVEN INCREASE? I MEAN, WE'RE ALREADY GONNA INCREASE IT, BUT TO KEEP IT AT THAT LEVEL AS JUST A GIVEN, I, I, WE ARE ASSUMING THAT IT'S GOING TO CONTINUE, BUT IT OKAY.

IT WILL BE PART OF THE LEGISLATION THAT WE DEAL WITH AND THE OPTIONS THAT WE BRING TO YOU.

OKAY.

SO THAT CAN BE PART OF THE BASKET OF THINGS.

YES, MA'AM.

OKAY, THANK YOU.

SORRY, I HAD MY, MY OTHER QUESTION.

UM, WHAT IS THE RELATIONSHIP WITH T M R S IS THAT, IS STAFF PART OFT? M R SS R 22 STAFF MEMBERS ARE PART OF T M R S.

WE JOINED T M R S TWO YEARS AGO, YEAR, YEAR AND A HALF AGO.

YEAH.

BEFORE THAT WE WERE NOT ONE, WE WEREN'T IN OUR PENSION SYSTEM.

WE HAD A DEFINED CONTRIBUTION PLAN.

WE'VE NEVER BEEN MEMBERS OF THE D P F P PENSION SYSTEM OR THE E R F PENSION SYSTEM.

SO WHEN IT CAME DOWN TO MAKING A CHOICE, YOU WENT WITH T M R S? WELL, WE WOULD'VE LIKED WE WOULD'VE LIKED OTHER OPTIONS.

I WOULD LOVE TO BE PART OF E R F.

UM, BUT THAT WASN'T AN OPTION.

WE DIDN'T WANNA BE PART OF OUR, UM, DIDN'T THINK THE MEMBERS WANTED US TO BE PART OF THEIR SYSTEM.

TOO SMALL.

I MEAN, THERE WAS A LOT OF, WE DIDN'T HAVE A LOT OF OPTIONS, I GUESS.

SO WE MOVED THE CONTRIBUTIONS THAT THE, THE SYSTEM WAS ALREADY MAKING TOWARDS OUR RETIREMENT INTO T M R S.

WE ALSO, AS EMPLOYEES, DON'T PARTICIPATE IN SOCIAL SECURITY, JUST LIKE THE CITY EMPLOYEES.

MM-HMM.

.

SO THAT'S THE ONLY RETIREMENT.

YES.

KELLY? UM, IF YOU CAN ANSWER THIS QUESTION, YOU CAN, YOU DON'T HAVE TO.

SO I KNOW THERE'S A NUMBER.

WHAT DO YOU THINK IS THE NUMBER THAT WE GOTTA CONTRIBUTE TO THIS PENSION TO GET THIS SOLVING? I MEAN, I AIN'T GONNA HOLD YOU TO IT.

YOU KNOW, I HEAR 63 MILLION FOR THE NEXT 30 YEARS.

I HEAR A HUNDRED MILLION, YOU KNOW, FOR THE NEXT 20 YEARS.

HAVE YOUR ACTUARY, HAVE Y'ALL LOOKED AND SAID, WHAT IS A NUMBER? I MEAN, A RANGE IS WHAT IS A RANGE.

UM, SO WE KNOW WE HAVE A $3 BILLION SHORTFALL AND, UM, TO MEET 30 YEARS TO FUND, I BELIEVE AS A LUMP SUM, THAT NUMBER WILL BE IN EXCESS OF A BILLION DOLLARS.

I DON'T WANNA ESTIMATE THE NUMBER EITHER ON AN ANNUAL BASIS OR LUMP SUM ONLY BECAUSE IN LESS THAN A MONTH, THE, UM, INDEPENDENT ACTUARIAL WILL GIVE YOU THE FIRST LOOK AT THAT RIGHT NUMBER, WHICH WILL BE WAY BETTER THAN ANY NUMBER I CAN COME UP WITH.

YEAH.

AND, AND, AND THE REASON WHY I SAY THAT, YOU KNOW, UH, WHEN SOMEONE SAID, UH, COME UP WITH A PLAN, IT'S JUST A PLAN.

AND, AND WE HAVE NOT CAME UP WITH A PLAN.

WE ARE IN THE PROCESS TRYING TO COME UP WITH A PLAN AND, AND, AND I'M JUST KIND OF LOOKING AT SOME SMART PEOPLE AROUND HERE SMARTER THAN I, THAT YOU, YOU CAN COME UP ANY KIND OF PLAN.

IT'S A PLAN, YOU KNOW, YOU THROW SOME SUGGESTION OUT THERE, BUT NO ONE HAS HERE A SUGGESTION.

YOU KNOW, HEY, IS THIS $1.15 BILLION LUMP SUM? IS IT 1 BILLION? OR IT COULD BE A PLAN FOR $60 MILLION FOR 30 YEARS.

THEY COULD BE THE PLAN, BUT WE HAVE NOT EVEN TALKED ABOUT A PLAN.

BUT WE, WELL, WE, ON ACTUARY, YOU KNOW, YOU HEAR THE, THE, THE EMPLOYEE RETIREMENT, THEY DO AN ACTUARY ONCE A YEAR.

SO HOW OFTEN DO YOUR ACTUARY COME IN TO LOOK AT YOUR BOOKS? SO WE DO AN, OUR ACTUARIAL STUDY ONCE A YEAR AS WELL.

AND WHAT THEIR LAST STUDY SHOWED WAS WE NEEDED TO, TO BE FULLY FUNDED, THE CONTRIBUTE IN 23 YEARS, IT NEEDED TO BE 52.3%.

AND, AND I HAVE BACK ENGINEERED THEIR SPREADSHEETS AND KNOW THAT IF WE HAD A BILLION DOLLARS IN 2025, WE WOULD GET THERE.

BUT WHAT I, WHAT I AM NOT ABLE TO DO, BECAUSE I DON'T HAVE THE SOFTWARE OR THE KNOWLEDGE TO DO IT, IS CALCULATE WHEN THAT COLA HITS IN AND ALL THOSE NUANCES THAT ONLY AN ACTUARY CAN DO.

I CAN'T DO THAT FOR YOU, BUT YOU KNOW, IT'S GOING TO BE AN EXCESS OF A BILLION DOLLARS, I WOULD THINK.

OKAY.

UM, IF YOU GO TO 52%, I THINK THAT'S 63 MILLION FOR THE FIRST YEAR, AND THEN IT WOULD GO UP AS, AS PAYROLL GOES UP.

WELL, YOU, YOU DID SMART.

I MEAN, YOU, YOU TAP ALL THE WAY AROUND THAT QUESTION, BUT YOU ANSWERED IT BY $63 BILLION FOR THE FIRST YEAR.

WE DON'T KNOW WHAT WOULD BE THE SECOND YEAR BECAUSE INFLATION COULD KICK IT MAYBE 65 THE NEXT YEAR.

IT MIGHT BE 68 YEAR AFTER THAT, SEVEN YEAR AFTER THAT.

BUT THERE IS A NUMBER THAT WE COULD HAVE CIRCLE AROUND US, BECAUSE

[01:55:01]

WE CANNOT BE OBLIGATED TO THE FUTURE COUNCIL, BUT WE CAN OBLIGATED, WHAT WE NEED TO DO IS TO START SOME KIND OF PLAN.

SO WE START SAYING, OKAY, WHEN WE LOOK AT THE BUDGET NEXT YEAR, NEXT YEAR, AND SAY, HERE'S THE BUDGET.

WE NEED TO SET ASIDE X AMOUNT OF DOLLARS THIS YEAR GOING FORWARD.

WE NEED TO TIGHTEN OUR BELT.

INSTEAD OF TRYING TO SAY, IF WE'RE GONNA LOWER THE TAXES, THEY'D LOWER THAT TAX, PUT IT OVER HERE, BUT WE NEED TO PAY THIS DEBT.

MM-HMM.

.

SO I, I'M JUST TRYING TO MAKE SURE THAT, YOU KNOW, WE ALL ON THE SAME PAGE.

COLLEAGUES, CHAIRMAN, MIDDLE, UM, THANK YOU.

I THINK YOU'RE LEADING AN INTERESTING CONVERSATION.

UM, BUT OF COURSE IT'S ASSUMING THAT ALL OF THOSE DOLLARS ARE COMING FROM A GENERAL FUND PAYMENT WHERE WE MAY DO THINGS LIKE SELL ASSETS.

I'M, I'M LOOKING AT ALL OPTION, RIGHT? I MEAN, AND I'M GLAD, GLAD YOU ARE, YOU KNOW, IF WE CAN SELL MYSELF AND PAY THE BILL, I SELL MYSELF FOR THE CITY TO PAY THE BILL.

WOW.

, I'M GONNA STAY AWAY FROM THAT COMMENT.

UM, I'M GONNA START WITH, UM, THIS QUESTION FOR YOU, KELLY.

ARE THE FUNDING CHALLENGES IN YOUR PENSIONS SO SEVERE THAT YOU ARE SELLING ASSETS TO PAY BENEFITS? NO, WE'RE NOT, WE'RE NOT SELLING ASSETS TO PAY BENEFITS, BUT WE ARE, WE DO HAVE A HUNDRED MILLION DOLLAR BENEFIT SHORTFALL EVERY YEAR.

UM, BUT WE'VE NOT SPECIFICALLY SOLD ASSETS TO PAY BENEFITS, BUT IT IS, IT'S A CHALLENGE THAT WE HAVE AND THAT'S BECAUSE WE HAVE MORE RETIREES WITH HIGHER BENEFITS THAN THE CONTRIBUTIONS COMING IN.

UM, JACK THIS YEAR, DID WE PAY THE REQUIRED MINIMUM PAYMENT INSTEAD OF, UM, MEETING THAT MINIMUM THRESHOLD THAT WAS REQUIRED BY LAW? WE'RE DOUBLE CHECKING THAT, BUT I'M PRETTY SURE THAT WE EXCEEDED THE, THE MINIMUM THIS YEAR IN, IN 23, BUT WE'RE, WE'RE DOUBLE CHECKING THE NUMBER.

SO IN THE SPREADSHEET YOU GAVE ME, I BELIEVE IT SHOWED THAT WE WERE DOING AN $8 MILLION PAYMENT.

THAT'S WHY I'M DOUBLE CHECKING.

OKAY.

UM, CHAIR, YOU HAD TALKED ABOUT THE $14 MILLION THAT HAD BEEN PROPOSED IN THE MANAGER'S BUDGET FOR, UM, A PENSION STABILITY FUND.

HOWEVER, THE ITEM THAT WASN'T DISCUSSED IS THAT THE MANAGER ALSO SAID HE HAD NO INTENTION OF ACTUALLY WRITING A CHECK TO THE PENSION, WHICH IS WHY WE HAD A VERY, VERY HEATED DISCUSSION WHERE I CALLED IT.

BUT THAT'S, THAT, THAT'S A, THAT IS A COUNCIL RESPONSIBILITY, NOT THERE BECAUSE WE CONTROL THE BUDGET, NOT THE MANAGER.

THAT'S OUR RESPONSIBILITY.

THIS IS WHY HE AND I, BUT THAT'S OUR RESPONSIBILITY AS A COUNCIL.

WE ARE THE POLICY MAKERS AND HE'S ADMINISTRATION.

WE TELL HIM, WELL, HE WORKED FOR US, WE DON'T WORK FOR HIM.

WELL, I JUST WANNA PUT THAT ON THE RECORD.

OKAY.

WELL, I'M GLAD YOU DID.

UM, THE NEXT ITEM I'D JUST LIKE TO POINT OUT IS ON CHART SIX OF YOUR PRE THE CHART ON PAGE SIX OF YOUR PRESENTATION IS REALLY GOOD.

AND, UM, WHAT I WOULD LOVE TO SEE IS ACTUALLY ANOTHER COLUMN THAT YOU CAN'T PROVIDE, BUT PERHAPS JACK COULD, WHICH IS THE E R F.

AND I'D LIKE TO SEE CHAIR, IF I CAN REQUEST A SIDE BY SIDE, THERE'S ADDITIONAL PLAN FEATURES THAT I THINK SHOULD BE INCLUDED AS WELL.

BUT IF WE COULD TAKE BOTH ELEMENTS THAT, I MEAN, I THINK THEY'VE PRESENTED ALL OF THEM, INCLUDING THINGS LIKE OVER TIME WHATNOT AND DO A SIDE BY SIDE.

I THINK THAT THIS WOULD BE INFORMATIVE FOR US, FOR ME, I'LL TELL YOU THAT WHAT I'VE LEARNED ABOUT THE PENSION OVER THESE YEARS IS THAT WE HAVE A SEVERE PROBLEM WITH PARODY.

AND WHEN WE THINK ABOUT A SERGEANT WHO HAS SPENT 25 YEARS OF THEIR LIFE AT A DESK, AND NEXT TO THEM IS A CLERICAL, NON-SWORN POLICE, UM, EMPLOYEE, THIS POLICE EMPLOYEE MIGHT BE GETTING WAY MORE MONEY AS A RETIREE THAN THE SERGEANT WHO IS BEING PAID MORE BECAUSE THEY'RE GETTING COLAS.

THEIR PLAN IS JUST SET UP SO DIFFERENTLY.

AND I THINK WE AS A POLICY MAKING BODY HAVE TO SAY, IS THIS THE RIGHT THING? IS THIS ACTUALLY FAIR? NUMBER ONE? AND NUMBER TWO, WE HAVE SUCH A FOCUS ON TRYING TO HIRE OUR SWORN OFFICERS AND WE'RE PAYING THEM LESS, UM, AS WELL AS THEIR CONTRIBUTION TO PENSION IS 35%, IS THAT RIGHT? I'M SORRY.

IT'S, UH, 13.32, 13.5, 13.5.

BUT E R F IS 13.32.

SORRY, SEND THAT BACKWARDS.

SO AGAIN, THE EMPLOYEE CONTRIBUTION FOR OUR SWORN HIGHER THAN FOR OUR E R F.

AND SO THAT'S WHERE I JUST LIKE TO SEE THAT IN A CHART SIDE BY SIDE, PLEASE.

AND JACK, MAKE SURE THAT'S HR, YOU KNOW, I THINK THAT'S THE HR, BECAUSE RIGHT NOW I DON'T THINK IT'S THEIR, THEIR RESPONSIBILITY.

THAT'S OUR RESPONSIBILITY AND, AND WE CAN PROVIDE THAT, THAT PROVIDES THAT.

I MEAN, YOU KNOW, YOU'LL SEE KELLY, I DON'T THINK Y'ALL, THAT'S, THAT'S, THAT'S ON US.

SO, UM, CHAIR, I GUESS MY LAST COMMENTS, UM, SO I'M TALKING ABOUT PARODY IS PROBABLY ONE OF MY FOUR ISSUES WITH THE PENSIONS.

OKAY.

THE SECOND IS THAT WHATEVER WE DO TO COME UP WITH A SOLUTION, I'M HOPING IT WILL BE EXTREMELY SPECIFIC.

[02:00:01]

NOT WE'RE GONNA SELL SOME ASSETS, BUT LIKE IDENTIFY THE ASSET, LIST THE ADDRESS.

I WANNA KNOW EXACTLY WHAT IT IS AND WHERE IT IS.

EVEN IF WE'RE NOT PLANNING ON SELLING IT IN YEAR ONE, LET'S IDENTIFY IT.

AND THEN NUMBER THREE IS IT HAS TO BE A LONG-TERM FIX.

WE CAN'T KEEP DOING THIS, RIGHT? I MEAN, WE SHOULDN'T HAVE TO KEEP DOING THIS, BUT I MEAN, YOU LOOK OUT AT THE PEOPLE WHO THIS IS REALLY AFFECTING AND THEY SHOULDN'T HAVE TO GO, THEY SHOULDN'T HAVE TO WORRY ABOUT THIS.

AND THEN LAST IS THE IMPACT THAT THESE PENSIONS ARE HAVING ON RECRUITING AND RETENTION.

AND WE TALK ABOUT THIS ALL THE TIME WITH OUR SWORN, BUT EVEN OUR NON-SWORN, THIS IS A REAL ISSUE.

AND, UM, I'M CONCERNED THAT NOT ADDRESSING IT PROPERLY AND WITH THE SERIOUSNESS THAT IT'S CALLED FOR WOULD MEAN CATASTROPHIC THINGS FOR OUR CITY.

THANK YOU.

WELL, I THANK YOU SAYING THAT.

AND, AND I THINK WE HAVE, UM, EIGHT COUNCIL MEMBER ON THIS COMMITTEE.

I REMEMBER A TIME WE HAD NINE, SO WE GOT EIGHT.

AND THAT'S A MAJORITY.

AND, AND WE CAN JUST PUT OUR ARMORS AROUND AND WE ARE THE POLICY MAKERS.

WE CAN MAKE THIS HAPPEN.

AND THAT'S WHY I SAID WE CAN MAKE IT HAPPEN FASTER THAN ANYONE ELSE BECAUSE WE ARE THE COMMITTEE, WE ARE THE POLICY MAKERS.

ONLY THING WE NEED IS THE DATA.

WE NEED TO ACTUARY TELL US WHAT DO WE NEED TO DO? AND WE DON'T HAVE THOSE NUMBERS.

AND WE NEED, WE NEED THOSE NUMBERS.

AND, AND I REMEMBER THE TIME THAT, UH, WHEN I WAS A TRUSTEE, I COULDN'T EVEN TALK TO THE CITY AND FIDUCIARY RESPONSIBILITY.

I COULDN'T EVEN TALK TO THE ATTORNEYS.

YOU KNOW, MY, MY OBLIGATION WAS TO THE TRUSTEE.

NOW WE ARE TALKING AND WE ARE COMMUNICATING.

WE DIDN'T DO THAT SIX YEARS AGO, SEVEN YEARS AGO.

SO NOW WE, WE ARE ON THE SAME BED TOGETHER.

WE WORK FOR THE SAME CAUSE.

BUT ALSO I DON'T WANT US TO BE DIVIDED AS, UH, TAXPAYERS, AS UNIFORM, AS PUBLIC SAFETY.

YOU KNOW, I HEAR THAT.

HEY, ARE WE MORE FOR THE PUBLIC SAFETY? ARE WE MORE FOR STREETS, SIDEWALKS AND, AND, AND, AND, AND REC SELLING EVERYTHING.

WE ARE ONE CITY.

SO WE DON'T NEED TO BE DIVIDED.

WE NEED TO BE TOGETHER BECAUSE THOSE TAXPAYERS PAY THE BILL.

SO I HEAR ALL THIS DISCUSSION DIVIDED, WHY DON'T WE JUST COME UNDER THE SAME TENT, SIT AT THE SAME TABLE.

IF EVERYBODY SIT AT THE TABLE AND HAVE A MEAL AND EVERYBODY WHO GET UP IS STILL NOT HUNGRY, WE HAVE A GREAT SUPPER.

SO JUST LEAVE IT AT THAT.

OH, SHEMA STEWART, HEAR YOUR LIGHTS ON.

I DO.

I HAVE A QUESTION.

UM, OKAY.

IT SEEMS LIKE TO ME ONE OF THE VER VARIABLES IN ALL OF THIS CONVERSATION IS THE MULTIPLIER.

AND I'M NEW TO PENSION SPEAK.

SO CAN YOU DEFINE THAT FOR ME AND HELP ME UNDERSTAND HOW IT'S BEEN APPLIED ACROSS THE, THE TWO PLANS THAT WE'RE TALKING ABOUT AND MAYBE EVEN THE DIFFERENCE BETWEEN, UM, THE A AND B, IF YOU'RE ABLE TO TALK ABOUT THAT.

I KNOW THAT'S, THAT'S THE EMPLOYEE FUND, THAT'S THE EMPLOYEES, BUT I'LL, I'LL EXPLAIN IT TO YOU AS BEST AS I CAN.

SO THE PENSION FORMULA FOR US AS WELL, A SIMPLIFIED PENSION FORMULA FOR US AS WELL AS FOR E R F, IS YOU TAKE A MEMBER'S SERVICE.

SO HOW, HOW LONG THEY'VE BEEN HERE, SAY 20 YEARS TIMES THEIR AVERAGE COMPENSATION PAY, LET'S SAY THAT'S $5,000.

UM, AND THEN YOU TIMES IT MULTIPLY THAT TIMES A MULTIPLIER.

AND IN OUR CASE, FOR TIME BEFORE 9 1 17, IT WAS A 3% MULTIPLIER.

AND NOW FOR TIME AFTER 9 1 17, IT'S TWO AND A HALF PERCENT.

SO WE ACTUALLY, FOR US, WE DO TWO CALCULATIONS.

UM, WHERE YOU DO, YOU FIGURE OUT THEIR AVERAGE COMP PAY, WHICH IS DIFFERENT PRE AND POST, AND THEIR, UM, THEIR SERVICE TIME IS THE SAME, BUT THE MULTIPLIER'S DIFFERENT.

AND THEN YOU ADD THOSE TWO TOGETHER.

SO THE MULTIPLIER IS REALLY THE PERCENTAGE FACTOR OF THEIR BENEFIT.

AND WHEN IT ALL ADDS UP FOR OUR, FOR D P F P IS ALL OF THAT COMBINED, THEIR PENSION ON AN ANNUAL BASIS CAN'T BE MORE THAN 90% OF THEIR SALARY.

WHEREAS E R F, I THINK THEIR MULTIPLIER FOR THEIR TA IS 2.75 AND 2.5.

THERE WAS TWO 2.75 FOR EMPLOYEES HIRED PRIOR TO, UH, 2016.

YEAH.

AND 2.5 FOR THOSE AFTER IT WAS NEVER AT 3%.

RIGHT.

DO ANY OF THE, THE PENSIONS GO TO A HUNDRED PERCENT OF THEIR SALARY IN OUR PLAN? THEY CAN, THEY MAX OUT AT 90% AND THEY CAN'T GET MORE THAN 90% AT D P F P.

AND THEY, THE NON-UNIFORM PLAN, YOU CAN EARN UP TO A HUNDRED PERCENT.

I THINK IT TAKES 36 YEARS OF SERVICE OR SO BEFORE YOU GET TO THAT LEVEL.

OKAY.

[02:05:06]

THAT'S IT FOR ME.

THANK YOU.

ANYONE ELSE? MS. HOWARD? YOU GOT ANY CLOSING REMARKS? JACK, YOU IN A CLOSING REMARKS? I KNOW YOU HAVE SOME YOU IN A CLOSING REMARKS.

DO I HAVE WHAT? IN A CLOSING REMARKS? WELL, I JUST WANTED TO REMIND THAT WE DO HAVE THE TWO OTHER MEETINGS SCHEDULED FOR, UH, THURSDAY, NOVEMBER THE NINTH.

SO, UH, KYRON IS GOING THE INDEPENDENT ACTUARIES BRIEFING THE BOARD THAT MORNING, AND THEN WE HAVE THREE TO FIVE IS WHAT WE HAVE ON THE DRAFT CALENDAR.

AND THEN ON DECEMBER THE 14TH, WE HAVE THE NEXT MEETING, WHICH WOULD BE WHEN THE STUDY GROUP, UH, BILL QUINN, ROB WALTERS, AND THEN STAFF WOULD COME BACK WITH SOME OPTIONS FOR, FOR THE DIFFERENT PLANS RIGHT.

POINT OF INFORMATION.

DOES THE, UM, BOARD, UM, HAVE TO POST LIKE WE DO THEIR, UM, PRESENTATIONS? IN OTHER WORDS, CAN WE SEE THAT BEFORE IT HITS THEIR, UH, MEETING ON THAT MORNING? SO, UH, THAT WOULD BE WE'LL POST.

THAT'D BE THE KELLY QUESTION.

HOW Y'ALL POST Y'ALL INFORMATION, YOU KNOW, WHEN ACTUALLY COME TO Y'ALL ON, IN NOVEMBER.

DO Y'ALL POST THAT THE DAY BEFORE OR DO Y'ALL POST THE AGENDA? WHAT? SO WE WILL PROVIDE IT TO OUR TRUSTEES, THE FRI ASSUMING WE HAVE IT THE FRIDAY BEFORE THE BOARD MEETING ON THURSDAY FOR SOMETHING THAT'S THAT SENSITIVE.

HOWEVER, WE PROBABLY WON'T POST IT TO THE PUBLIC BECAUSE WHAT ENDS UP HAPPENING, I KNOW YOU EXPERIENCED THIS, RIGHT? YOU GET A NEWSPAPER ARTICLE BEFORE THE BOARD'S EVEN HAD A CHANCE TO TALK ABOUT IT.

SO WE'LL POST IT TO THE PUBLIC IN THE MORNING.

UM, BUT WE COULD MAKE IT AVAILABLE TO YOU AS SOON AS WE HAVE IT.

I WAS GONNA SAY IF, IS THERE A WAY THAT WE CAN I, I THINK, UH, JACK, WHAT WE'RE TRYING TO DO, THEY'RE GOING TO, THEY'RE GONNA MEET THAT MORNING, RIGHT? YES, SIR.

AND, AND, AND HOPEFULLY THAT WE PROBABLY TRY TO MEET A LITTLE SCALE MEETING WHAT VIRTUAL WHATEVER, RIGHT BEFORE THE MEETING ON, ON THURSDAY.

WE DON'T KNOW WHAT TIME, WHATEVER.

JUST KEEP YOUR PHONE OPEN SO WE HAVE SOMETHING BEFORE THE PUBLIC, BECAUSE I DON'T WANT, WE GET BLINDSIDED, YOU KNOW, THEY GET THE INFORMATION AND WE DON'T GET IT, YOU KNOW, UNTIL 12 HOUR, 14 HOUR LATER.

BUT I WANT TO, AT LEAST WE, THE COMMITTEE HAS SOME KIND OF INSIGHT ON WHAT'S GOING ON, SO I'M SUGGESTING THAT.

SO WE ARE TRYING TO WORK THAT OUT.

IF KELLY PROVIDES IT TO ME, WHENEVER KELLY PROVIDES IT TO ME, I CAN PROVIDE IT TO THIS COMMITTEE AND NOT MAKE IT PUBLIC.

THERE MEETING WHAT TIME Y'ALL MEETING ON THAT DAY? 8:30 AM AND IT'S THE FIRST ITEM.

YOU'D BE FINE.

YOU KNOW, YOU, YOU CAN DO TWO.

I CHANGED THE MEETING AT THREE O'CLOCK.

I KNOW YOU GOT PLENTY OF TIME.

IT'S GOOD.

OKAY.

IT IS NOW THREE 13.

I CALLED THE AD HOC COMMITTEE ON THE PENSION.

ADJOURN.