[00:00:03]
OKAY, WE'RE GONNA GET STARTED.
[Ad Hoc Committee on Pensions on December 14, 2023.]
IT IS NOW THREE OH FIVE.WE ARE GONNA CALL THE AD HOC COMMITTEE ON PENSION TO ORDER.
FIRST, I WANT TO THANK EVERYONE FOR COMING TODAY.
YOU KNOW, WE ARE GATHERING HERE TODAY TO ADDRESS A PRESSING MALOR CONCERN, THE FINANCIAL STABLE STABILITY OF THE DOLLAR POLICE AND FIRE PENSION AND THE EMPLOYEE'S PENSION.
ALSO, YOU KNOW, I'M HONORED TO BE HERE WITH ALL MY COLLEAGUES HERE BESIDE ME TO MAKE SURE THAT WE DO HAVE A PLAN TO MAKE SURE THAT WE MAKE SURE WE GOT A STRONG FOUNDATION AND MAKE SURE THAT WE ARE GONNA MAKE SURE THAT WE WILL, TO MAKE SURE THAT WE DO COME UP WITH A PLAN THAT EVERYONE WOULD ENJOY.
WOULD, WOULD, UM, BE PART OF IT.
UM, RIGHT NOW THE FIRST ORDER OF FIRST ONE GONNA BE GONNA BE THE EMPLOYER RETIREMENT FUND OF THE CITY OF DALLAS, WHICH CHERYL OLSON AND DAVID TRICH.
APPROACH HIM ATKINS AND COUNCIL MEMBERS.
I AM THE EXECUTIVE DIRECTOR OF THE DALLAS EMPLOYEES RETIREMENT FUND.
I'M JOINED TODAY BY DAVID ETHERIDGE, WHO IS THE DEPUTY DIRECTOR FOR THE FUND.
CAN I CUT YOU ONE SECOND? LEMME GET A MOTION FOR THE MINUTES.
I FORGOT YOU GOT A MOTION FOR THE MINUTES.
UH, SO, UH, I'M JOINED TODAY BY DA UH, DAVID RIDGE, WHO'S THE DEPUTY DIRECTOR FOR THE DALLAS EMPLOYEES RETIREMENT FUND.
AND OUR GOAL TODAY IS TO, UH, PROVIDE A LITTLE BACKGROUND, UH, THIS FOLLOW UP TO OUR MEETING THAT WE HAD A FEW MONTHS AGO, AND THEN ALSO, UH, PRESENT TO YOU SOME CONSIDERATIONS FOR A, UM, A FUTURE SOLUTION FOR THE FUND.
UH, JUST AS BACKGROUND, JUST OUR, UH, FUND WAS ESTABLISHED IN 1944.
IT IS A SINGLE EMPLOYER DEFINED BENEFIT PLAN, UH, THAT PROVIDES RETIREMENT, DISABILITY, AND DEATH BENEFITS FOR THE CIVILIAN EMPLOYEES OF THE CITY OF DALLAS.
WE ARE GOVERNED BY A SEVEN MEMBER BOARD, WHICH CONSISTS OF THREE, UH, THAT ARE APPOINTED BY THE CITY COUNCIL, THREE EMPLOYEES ELECTED BY THE MEMBERSHIP AND THE CITY AUDITOR THAT SERVES BY VIRTUE OF HIS POSITION.
UH, JUST BY A LITTLE ABOUT THE DESIGN.
AS YOU KNOW, THE CITY OF DALLAS DOES NOT PARTICIPATE IN SOCIAL SECURITY.
UH, DALLAS, ERF DOES NOT AND, AND HAS NEVER HAD A DROP PROGRAM.
AND ALSO THE COST OF LIVING ADJUSTMENTS ARE BASED ON CP, UH, THE CONSUMER PRICE INDEX.
UH, AS OUR BOARD CONSULTANTS, OUR ACTUARY GO ROTOR SMITH, OUR INVESTMENT CONSULTANT WILSHIRE, AND WE HAVE THREE LAW LEGAL LAW FIRMS THAT WE WORK FOR WORK WITH.
THIS IS A LITTLE GLIMPSE OF OUR INVESTMENT HISTORY SINCE 1995.
AND AS YOU CAN SEE, UH, UH, AND THE GREEN LINE IS THE 7.25%, WHICH IS OUR ACTUAL RATE OF RETURN.
UH, WHAT YOU'LL SEE THROUGH, UH, THIS IS THAT TWO THIRDS OF THE TIME WE OUTPERFORM OUR ACTUAL RATE OF RETURN.
AND, UM, UH, AND ACTUALLY AS OF NOVEMBER 30TH, UH, 2023, OUR YEAR TO DATE RETURN WAS 6.53, JUST FRESH OFF THE PRESSES AS OF YESTERDAY.
'CAUSE YESTERDAY WAS A VERY GOOD DAY IN THE MARKET AS OF YESTERDAY.
UM, WE LOOK AT OUR INVESTMENT RETURNS EVERY DAY, AND ESPECIALLY AS WE GET CLOSE TO OUR END OF YEAR.
UH, AS OF, UH, DECEMBER 13TH, 2020 3 23, UH, WE HAD A NET RETURN OF 8.4%.
AND SO WE'RE CLOSING IN AT THE END OF THE YEAR.
AND SO IT LOOKS VERY GOOD THAT WE ARE GOING TO EXCEED OUR ACTUAL RATE RETURN.
THIS IS NOVEMBER 30TH, UH, 2023.
BUT ONE NUMBER I DID WANNA NOTE IS THAT SINCE INCEPTION, UH, SINCE 1985, OUR RETURN HAS BEEN 8.63%.
UH, OUR ASSETS UNDER MANAGEMENT AS OF NOVEMBER 30TH, THAT'S 3.55 BILLION.
WE DO CONDUCT OUR, UH, ACTUAL EVALUATION ANNUALLY.
WE ALSO CONDUCT AN EXPERIENCE STUDY.
SO WE ACTUALLY GO OUT AND LOOK AT OUR, UM, ASSUMPTIONS AND WE, UH, LOOK AT THE EXPERIENCE, OUR ACTUAL EXPERIENCE, AND DO THE STUDY EVERY FIVE YEARS.
AND WE MAKE ADJUSTMENTS AS NEEDED.
WE DO AN INDEPENDENT PEER REVIEW AUDIT EVERY FIVE YEARS.
UM, SO WE ACTUALLY TAKE OUR ASSUMPTIONS, GIVE IT TO A COMPLETELY INDEPENDENT ACTUARY, AND THEY RUN THAT THROUGH THEIR SYSTEM TO MAKE SURE THAT THEY ARE GETTING THE SAME NUMBERS AS OUR ACTUARY.
AND THEN OUR FUNDED RATIO AS OF, UH, 1231 2022 IS 73%.
SO ON THE NEXT SLIDE, UH, MAYOR PRO TIM ATKINS AND COUNCIL MEMBERS, WE WANTED JUST TO SHARE A COUPLE OF FACTS AND FIGURES REGARDING THE CIVILIAN EMPLOYEES.
UH, IT'S RARE THAT WE WOULD JUST TALK ABOUT CIVILIAN EMPLOYEES, BUT AS YOU THINK ABOUT THEM FROM A RETIREMENT STANDPOINT,
[00:05:01]
THE AVERAGE RETIREE RECEIVES A BENEFIT OF JUST OVER $40,000 A YEAR.UM, AND LAST YEAR WE PAID OUT A TOTAL OF 317 MILLION, UH, FOR THE TOTAL HEADCOUNT OF RETIREES THAT WE HAVE.
AND AS YOU CAN SEE, THAT'S ABOUT 77, A LITTLE BIT MORE THAN 7,700 RETIREES, UH, CLOSE TO 6,000 OF OUR MEMBERSHIP.
WE HAVE ABOUT 15,000 A LITTLE BIT ABOVE THAT ACTUALLY LIVE IN THE CITY OF DALLAS AND OUR RESIDENTS.
BUT WHAT'S ALARMING FOR THE FACTS THAT WE'RE SHARING WITH YOU IS THE RATE OF TURNOVER.
ANYTIME THAT WE LOOK AT MODIFYING OF THE SUMMARY PLAN DOCUMENT, WE HAVE TO LOOK AT SOME KEY FACTS.
RIGHT NOW, THE CITY'S RATE OF TURNOVER IS 17% FOR CIVILIAN EMPLOYEES.
WHEN YOU LOOK AT POLICE AND FIRE, UH, YOU'LL SEE REPORTED FROM THE HR DEPARTMENT TO POLICE IS 1%, FIRE IS 2.4%.
BY THE WAY, 17% IS SIGNIFICANTLY HIGHER THAN THE BUREAU OF LABOR STATISTICS AVERAGE FOR THE SAME TIME PERIOD, WHICH RANGE FROM 3.6 TO 4.2%.
SO THERE'S A RISK WHEN MODIFYING BENEFITS OF LOSING INSTITUTIONAL KNOWLEDGE.
1100, UH, CURRENT ACTIVE EMPLOYEES ARE ELIGIBLE TO RETIRE.
IF THOSE PEOPLE WERE TO RETIRE, UH, IN A QUICK STAGE, THAT WOULD BE AN ADDITIONAL COST TO THE CITY.
WE ESTIMATED AT ABOUT $12 MILLION.
ON THE NEXT SLIDE, WHAT WE WANTED TO ALSO SHOW WAS THE AVERAGE BENEFIT AND HOW IT RANKED AMONG THE HEALTH AND HUMAN SERVICE.
UH, HUMAN UH, SERVICES, UH, DEPARTMENTS, POVERTY LEVEL, PARTICULARLY AS IT RELATES TO, UH, RELATES TO AFFORDABLE CARE ACT.
THIS IS THE NUMBER THAT THEY USE TO DETERMINE HOW MUCH PREMIUM, UH, A PERSON SHOULD PAY WHEN THEY'RE ACTUALLY TAKING OUT A, A HEALTHCARE PLAN WITH THEM.
AS YOU CAN SEE ON THE AVERAGE BENEFIT, BASED ON THE AVERAGE BENEFIT THAT WE PAY OUT, UH, WE'RE RANKED BETWEEN A SIX MEMBER AND A SEVEN MEMBER HOUSEHOLD.
NOW, MOST OF OUR RETIREES ARE NOT IN A SIX OR SEVEN MEMBER HOUSEHOLD.
UH, BUT WHAT WE'RE SAYING IS WE DO HAVE TO TAKE INTO CONSIDERATION WHERE THESE, UH, RETIREES WILL LAND AS IT RELATES TO COST OF LIVING WITHIN THE COMMUNITY.
ON THE NEXT SLIDE, I'M GONNA SKIP OVER TO SLIDE EIGHT.
WE WANTED TO JUST GIVE YOU A LITTLE HISTORICAL PERSPECTIVE, UH, SLIDE BEFORE THAT PLEASE.
UH, THE HISTORICAL PERSPECTIVE BEFORE THAT, UH, IS THAT WHEN WE MODIFIED BENEFITS IN 2016, WE REDUCED THE BENEFITS, UH, FOR THE NEW TIER OF EMPLOYEES, TIER B BY 39%.
THESE ARE THE TOP SEVEN ITEMS THAT WE ACTUALLY REDUCED IN THE BENEFIT PLAN.
UH, BUT I WILL TELL YOU, UH, SOME DAYS I THINK ABOUT IT AND I STILL HAVE A HEADACHE.
WE LOOKED AT 47 DIFFERENT SCENARIOS, UH, WITH OUR ACTUARIES, BUT THESE WERE THE TOP SEVEN THAT GOT US TO THE DESTINATION.
WE DIDN'T NEED TO REDUCE ANYMORE, BUT 39% WAS SIGNIFICANT.
AND AGAIN, WHEN WE LOOK AT CHANGING THE PLAN, WE CONSIDER, UH, THOSE FACTORS MENTIONED BEFORE.
SO YOU MAY BE ASKING, AND I KNOW THAT WE MENTIONED THIS IN OCTOBER, WELL, HOW DID WE GET HERE? UH, ON THE NEXT SLIDE, ON SLIDE NINE, WHAT YOU'LL SEE IS EVERY CIVILIAN EMPLOYEE AS A CONDITION OF EMPLOY EVENTS MUST PARTICIPATE IN THE EMPLOYEE'S RETIREMENT FUND.
AND SO WHAT THAT MEANS IS THE HEAD COUNT OF THE CIVILIAN EMPLOYEES ACTUALLY DETERMINES THE CONTRIBUTION AMOUNT THAT ERF RECEIVES.
AND SO I HAPPENED TO OFFEND THE HR DIRECTOR BACK IN THE DAY, BUT IN 2009, WE MADE A SIGNIFICANT CUT.
AND THAT WAS OF COURSE, BECAUSE THE MARKET HAD FALLEN OUT.
UH, WE HAD SOME 717 ODD LAYOFF NOTICES THAT WE GAVE AT THAT TIME.
UH, WE SPUN OFF THE ZOO, THE CITY DID.
AND SO OUT OF THAT 717, THERE WAS 300 AND SOME ODD, UH, EMPLOYEES WHO WERE LAID OFF.
AND THEN THOSE HEADCOUNTS BASICALLY REDUCED THE HEAD, REDUCE THE AMOUNT OF, UH, CONTRIBUTIONS MADE TO ERF.
THAT BEING SAID, IF YOU LOOK ALL THE WAY THROUGH TO 2022, YOU'LL SEE THAT WE NEVER RETURNED TO THAT HEADCOUNT.
THAT BEING SAID, THAT MEANS THE CONTRIBUTIONS HAVE BEEN REDUCED SINCE 2009, AND WE'RE STILL WORKING THROUGH THE MATH OF HOW THEN OUR FUNDING LEVELS ARE.
ON THE NEXT SLIDE, YOU'LL SEE JUST A QUICK NUMBER.
AND I KNOW THIS IS A RECAP, SO I'M GONNA GO THROUGH REAL QUICK, THE BALANCE.
IF WE WERE TO HAVE KEPT THE HEAD COUNT THAT WE HAD IN 2008 AND 2009, UH, WE CALCULATED AND ESTIMATED THAT THOSE CONTRIBUTIONS WOULD'VE EQUATE TO ABOUT 1.3 BILLION.
AND THAT MAY HAVE CHANGED, UH, THE DISCUSSION THAT WE'RE HAVING TODAY.
SO WE WANTED TO BRING THAT TO YOUR ATTENTION.
AND THEN ON SLIDE 11, JUST WANTED TO HIGHLIGHT THE, UH, FUNDING SOUNDING RESTORATION PLAN.
THE PLAN THAT WE ARE WORKING TOWARD BASICALLY SAYS THAT IF WE ACT BY SEPTEMBER, 2025, WE CAN BASICALLY PARTICIPATE IN A 30 YEAR AMORTIZATION.
IF WE MISS THAT DATE, IT BECOMES A RISK AND AN INCREASED COST TO THE CITY AS THAT AMORTIZATION THEN WOULD GO DOWN TO 25 YEARS.
SO IT'S LIKE THE BANK SAYING TO YOU THAT NOW YOUR AMORTIZATION JUST CHANGED FROM A 30 YEAR AMORTIZATION TO 25, PLEASE INCREASE YOUR PAYMENT.
[00:10:01]
IT BACK OVER TO CHERYL.UH, FOR THE CONSIDERATIONS FOR, UH, WE LOOKED AT ALL DIFFERENT PROPOSALS AND, UM, THE CONSIDERATION WE'RE PUTTING IN FRONT OF YOU TODAY.
IT DOES NOT INCLUDE A REQUEST FOR BONDS.
IT DOES NOT INCLUDE, SO, UM, THE REQUEST HAS TWO THINGS.
ONE, CURRENTLY WE HAVE A 36% CAP ON CONTRIBUTIONS.
AND SO WHAT WE'RE PROPOSING IS THAT WE, UH, ELIMINATE THE MAXIMUM CONTRIBUTION CAP OF 36% OF PAY, AND THEN FOR THE VALUATION PERIOD, STARTING EFFECTIVE JANUARY 1ST, 2025, AND REPLACE IT WITH THE ACTUARILY DETERMINED CONTRIBUTION RATE.
THAT'S GONNA BE IN THE VALUATION REPORT.
AT THAT POINT, THE ALSO WE'RE RECOMMENDING, OR OR FOR YOUR CONSIDERATION, INCREASING THE EMPLOYEE CONTRIBUTION TO A MAXIMUM OF 14%.
AND SO, UH, WE'RE, UH, PROPOSING TO INCREASE THE EMPLOYEE CONTRIBUTION.
THE NEXT POINT, WHICH IS THE SELECTING THE APPROPRIATE AMORTIZATION SCHEDULE.
AND IT'S REALLY AROUND THE FACT THAT I KNOW THERE'S BEEN, UM, QUESTIONS OR IDEAS THAT MAYBE IN A FUTURE TIME YOU, UM, THE CITY MAY HAVE THE ABILITY TO PUT AN INFUSION OF, OF CAPITAL INTO THE FUND.
AND SO WHAT WE ARE PROPOSING IS THAT ANY LUMP SUM CONTRIBUTION FROM THE CITY AT ANY POINT IN TIME, UH, WILL HAVE A POSITIVE IMPACT EFFECT ON THE CITY'S CONTRIBUTION.
AND THEN WHAT WE'LL DO IS WE'LL RECALCULATE THE CITY'S CONTRIBUTION RATE, UM, TO BE, UH, OF COURSE IT WOULD BE LOWER AT THAT POINT.
SO ANY LUMP SUM AT ANY POINT IN TIME IN THE NEXT 30 YEARS, IT WILL BE COMPLETELY UP TO THE CITY COUNCIL TO DETERMINE WHAT THAT IS.
AS A PART OF THAT, WE'LL HAVE TO AMEND DRAFT CHANGES TO CHAPTER 40 A.
RIGHT NOW IT HAS TO, UM, GO TO THE VOTERS AS PART OF THE APPROVAL PROCESS.
AND SO IN WHAT WE'RE RECOMMENDING IS THAT FOR THE, TO MAKE THE MAY BALLOT, AND WE'LL TALK A LITTLE ABOUT THE REASONS WHY WE WERE RECOMMENDING MAY, IT'LL HAVE TO BE VOTED ON BY THE CITY COUNCIL BY FEBRUARY, 2025 IN ORDER TO CREATE THE REFERENDUM TO MAKE IT ON THE MAY BALLOT.
AND THEN THE CONTRIBUTION RATES WOULD GO INTO EFFECT, UM, OCTOBER 1ST, 2025.
SO THINK ABOUT IT FOR THE BUDGET YEAR 20 25, 20 26.
SO ALSO, ONE OF THE THINGS WE WANTED YOU TO KNOW WAS, AND SOMETHING AS AS, UH, AS IMPORTANT AS THIS, UH, THE BOARD HAS HIRED AN AN INDEPENDENT ACTUARY.
AND WHAT THEY HAVE DONE IS TAKEN ALL THE SCENARIOS THAT WE'VE DONE TO PART OF THIS PROPOSAL AND THEY'VE RUN IT THROUGH THEIR OWN SYSTEM AND THEN CONCURRED WITH THE RESULTS.
'CAUSE WE WANTED TO MAKE SURE, UM, JUST HAD AN INDEPENDENT SET OF EYES, UH, LOOK AT IT.
AND SO WE WANT YOU TO LET YOU KNOW THAT MILLIMAN WAS HIRED AND MILLIMAN HAS REVIEWED AND CONCURRED WITH ALL THE PROPOSALS.
SO THEREFORE, WHEN YOU LOOK AT IT, WE'RE ASSUMING, UM, A RATE OF RETURN OF 7.25, WHICH IS OUR NORMAL RATE.
UH, THE PENSION OBLIGATION BOND DEBT SERVICE IS PAID FROM CONTRIBUTIONS LIKE IT IS RIGHT NOW.
AND WE WOULD HAVE A PHASE IN SCENARIO.
SO AS I SAID BEFORE, THE 36% CAP IS REMOVED, MEMBER CONTRIBUTIONS CAPPED AT 14%, AND THEN WE'RE GONNA PHASE IN THE CITY'S CONTRIBUTIONS AT 2% EACH YEAR UNTIL WE GET TO THE ULTIMATE LEVEL PERCENT OF PAY.
AND SO, AND THE CITY CONTRIBUTION PREDICTED TO FULLY FUND THE PLAN 30 YEARS FROM NOW.
SO FOR EXAMPLE, YOUR SOMEONE MIGHT SAY, HOW MUCH IS THAT? RIGHT? SO FOR 2025, THE UH, WOULD BE AN ADDITIONAL 7 MILLION FOR THE CITY, AND THE EMPLOYEES WOULD CONTRIBUTE AN ADDITIONAL 3.5 MILLION.
IN 2026, IT WOULD BE, UH, 10.5 MILLION FROM THE CITY.
AND AS WELL, THE CONTRIBUTION RATE WILL BE BASED ON PAYROLL.
SO BASED ON HOW PAYROLL GROWS.
THIS CHART GIVES YOU A, A DEPICTION OF HOW, UH, THE PHASE AND SCENARIO WOULD LOOK.
SO IF YOU LOOK AT THE FIRST YEAR, IT GOES FROM 23 TO 24.
WHY? BECAUSE THE SIT, BECAUSE THE EMPLOYEES ARE COMING UP WITH ALMOST 1% FOR THAT 25, THAT 2% CONTRIBUTION.
SO, AND THEN IT GOES FROM 24 TO 26, AND THEN SO ON, UM, WHEN WE GET TO 30 YEARS, YOU'LL SEE THAT A DRAMATIC DROP BECAUSE ONCE THE UNFUNDED IS PAID OFF, IT IS JUST THE NORMAL COST.
THE NORMAL COST OF THE PLAN IS 14.5%.
SO THE CITY'S CONTRIBUTION RATE WOULD GO FROM TO 9% AND THE EMPLOYEES TO 5.5% THE YEAR, UH, ON THE 31ST YEAR.
AND I THINK THAT'S IMPORTANT TO KNOW THAT IT'S, THAT IT'S NOT A CONTRIBUTIONS, UH, INCREASE IN CONTRIBUTIONS FOREVER.
THERE IS A TIME PERIOD WHERE IT WILL BE PAID OFF AND THEN EVERYONE'S CONTRIBUTION COMES DOWN AND PAYS THE NORMAL COSTS.
AT THE, AT THE RATE WE HAVE NOW, WHICH IS THE 63% THAT'S PAID BY THE CITY, 37% IS PAID BY THE EMPLOYEES, AND, AND AT THAT POINT THEY WILL PAY THE NORMAL COST.
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RATE COMPARE TO OTHER CITIES, UM, OF COMPARABLE SIZE? SO YOU'LL SEE RIGHT NOW WITH THE CITY OF DALLAS ERF, UM, THE CONTRIBUTION RATE IS 22.68%.UH, RIGHT WITH THE PENSION OBLIGATION BONDS WE'RE, UM, 8% GOES FOR THE BONDS.
WE'RE REALLY ONLY GETTING BETWEEN 14 TO 15%.
UH, TO, UM, AS A CONTRIBUTION, YOU'LL SEE THE CITY OF AUSTIN, CITY OF FORT WORTH, UH, CITY OF HOUSTON, ALL AT HIGHER RATES.
SOME OF THEM ALSO HAVE THE ADDITION OF SOCIAL SECURITY, BUT WITH THE RECOMMENDED, UM, SCENARIO THAT THE ERF, UH, THE CITY'S CONTRIBUTION WILL BE BETWEEN 24 TO 33% AND THAT PUTS THEM RIGHT IN THE MIDDLE OF, OF, UM, SOME OF THE COMPARABLE CITIES.
SO GOING BACK TO THE TIMELINE, UM, AS YOU SAID, WE HAVE WORKED WITH, UH, CITY STAFF, WE HAVE WORKED WITH, UM, OUTSIDE INDEPENDENT ACTUARIES.
UM, OUR RECOMMENDATION OR PROPOSAL FOR YOUR CONSIDERATION IS THAT, UM, IF THE COUNCIL, UM, GIVES US APPROVAL TO GO MOVE FORWARD, WE WOULD AMEND NOT APPROVAL, BUT UH, DIRECTION TO MOVE FORWARD.
THEN WHAT WE WOULD HAVE TO COME BACK TO YOU WITH FOR THE FULL CITY COUNCIL IS THE ORDINANCE CHANGE TO AMEND CHAPTER 48 IN FEBRUARY OF 2024 WITH THAT, PUTTING IT ON THE BALLOT IN MAY OF 2024.
AND THEN IF THE VOTERS APPROVE THAT, THEN IT GOES INTO EFFECT JANUARY 1ST, 2025.
UH, THE, THE DELAY OR, OR THE TIME PERIOD IS IMPORTANT BECAUSE WE HAVE TO CHANGE OUR SYSTEMS IN ORDER TO ACCOMMODATE THE CHANGE IN THE, UH, CONTRIBUTION RATES.
AND SO WE WILL NEED THE TIME IN ORDER TO DO THAT.
SO JUST AS A FINAL, UM, SUMMARY, UH, OF OUR CONSIDERATIONS THAT IT DOES NOT INCLUDE A REST REQUEST FOR BONDS, UH, WE'RE ACTUALLY LOOKING FOR TWO CHANGES.
ONE IS THE ELIMINATE THE MAXIMUM CONTRIBUTION RATE OF 36%, THE CAP INCREASE THE EMPLOYEE CONTRIBUTION RATE TO 14%, AND THEN AMEND THE LANGUAGE SUCH THAT IF THE CITY WOULD LIKE TO PUT AN INFUSION AND CAPITAL IN THEY CAN AND THAT IT WILL ADJUST YOUR CONTRIBUTION RATE AS DETERMINED BY, UH, THE ACTUARY.
AND THEN, UM, AND THAT'S SAYING WITH THE TIMELINE, AMEND THE DRAFT CHANGES TO CHAPTER 40 A, UH, THE COUNCIL VOTING ON IN FEBRUARY TO PUT IT FOR THE DALLAS CITIZENS CITIZENS TO CONSIDER IN MAY OF 2024.
AND THEN THE CONTRIBUTION RATES WOULD NOT GO IN IMPACT, UM, GO INTO EFFECT UNTIL OCTOBER 1ST, 2025.
AND WITH THAT, I'LL SEE IF YOU HAVE ANY QUESTIONS.
UH, I JUST WANNA MAKE SURE THAT PEOPLE WHO LISTEN TO THIS AND YOU ARE SAYING YOU WANT TO GO TO THE VOTERS, YOU KNOW, SOMETIME IN MAY AND AND THEY GOT TWO ITEMS THAT YOU WANNA PUT ON THE BALLOT.
CAN YOU JUST SLOW AND SAY WHAT ARE THE TWO ITEMS AND THE REASON WHY THOSE TWO ITEMS NEED TO BE, NEED TO BE PUT ON THE, THE BALLOTS IS NOT BY INCREASED BENEFIT OR ANYTHING, BUT YOU NEED TO DO THAT BECAUSE YOU GOT A TIMELINE.
SO THE AMENDMENT PROCESS CURRENTLY FOR THE FUND IS THAT ANY CHANGES HAVE TO BE APPROVED BY THE COUNCIL, THE BOARD AND THE VOTERS.
AND SO, UM, SO THAT HAS TO GO IN A GENERAL OR SPECIAL ELECTION.
AND SO THAT IS WHY WE'RE LOOKING FOR MAY.
THE CHANGES WE'RE REQUESTING ARE SIMPLY THREE.
ONE, ELIMINATE THE CAP OF 36%.
TWO, ALLOW FOR THE, UH, EMPLOYEE CONTRIBUTIONS TO GO UP TO A MAXIMUM 14%, AND THREE, PUT IN THE LANGUAGE THAT WILL ALLOW THE COUNCIL TO PUT IN AN INFUSION OF CAPITAL AT SOME POINT IN TIME.
AND THEN AT THAT POINT THE CONTRIBUTION RATE FOR THE CITY WILL BE ADJUSTED.
AND IF THOSE ARE THE THREE THINGS, IF, IF YOU MISS THAT DEADLINE, I KNOW THERE'S A, A, A CARRY IN AT THE END OF THE LINE THAT YOU MIGHT HAVE TO CHANGE, UH, FROM 25 YEAR TO 30 YEAR.
COULD YOU EXPLAIN THAT WHY? YES, NO, WE CAN.
SO THE PENSION REVIEW BOARD, WHICH IS THE GOVERNING BOARD AT THE STATE LEVEL, UH, BASICALLY HAS AUTHORIZED THROUGH STATE STATUTE THAT WE HAVE TWO OPTIONS.
OPTION ONE IS WHAT WE'RE PROPOSING TODAY THAT WE, UH, PRESENT A 30 YEAR AMORTIZATION AND THAT WE HAVE THAT IN EFFECT BY SEPTEMBER 1ST, 2025.
SECOND OPTION, IF WE MISS THAT DEADLINE, MEANS THE AMORTIZATION GOES DOWN TO 25%, WHICH MEANS THE COST GOES UP 25, 25 YEARS.
WHY 25 YEARS? UH, THE REASON WHY WE THINK IT'S IMPORTANT TO GO IN MAY ONE, CHERYL TALKED ABOUT THE SYSTEM CHANGE.
UH, WE HAVE A FAIRLY NEW PENSION AND ACCOUNTING SYSTEM, WE WOULD HAVE TO MODIFY IT.
WE WOULD ALSO HAVE TO GO BACK TO THE PRB BOARD TO MAKE SURE THAT WHAT'S BEING PROPOSED AND THE VOTERS HAVE APPROVED IS ALSO ACCEPTED BY THEM.
AND THEN WE ALSO NEED TO COMMUNICATE WITH THE EMPLOYEES THE INCREASE IN COST TO THEM.
SO THERE ARE SOME THINGS THAT WE NEED TO DO, AND SO THAT'S WHY WE'RE PROPOSING TO GO SOONER RATHER THAN LATER.
[00:20:01]
OKAY.WITH THAT COUNCILOR BLACKMAN, UH, THANK YOU.
UM, DAVID, YOU HAD MENTIONED BECAUSE OF THE DECREASE IN, UM, OUR EMPLOYEES, KIND OF WHAT STARTED A TRAJECTORY.
WHAT ARE YOU PROJECTING TO BE OUR BASELINE FOR EMPLOYEES GOING FORWARD WITH THESE CHANGES? YOU KNOW, THAT'S A GREAT QUESTION.
UM, COUNCILWOMAN BLACKMAN, I DON'T KNOW THAT WE HAVE A BASELINE.
IF I WAS TO PROFESSIONALLY SUGGEST ONE, I WOULD REALLY SAY IT'S APPROXIMATELY 8,000 EMPLOYEES IN THE ACCOUNT.
NOW, BECAUSE RIGHT NOW YOU'RE AT, YOU'RE AT 74 64.
YES, BECAUSE I KNOW IT MATTERS HOW MANY PEOPLE YOU HAVE EMPLOYED THAT ARE PAYING INTO THIS.
NOW WE ACTUARILY CAN'T SAY TO YOU, 8,000 WILL DO X, Y, Z TODAY.
I'M JUST SUGGESTING TO YOU, WHEN YOU LOOK AT THE ROADMAP OF WHERE THEIR HEAD COUNT STARTED TO REDUCE, UH, THE AVERAGE IS RIGHT AROUND 8,000 THAT COST THE, THE ERF FUND A SIGNIFICANT FUNDING LEVEL.
ARE WE DOING THE ONE QUESTION OR DO WE GET TO ASK 2 0 2? UM, THAT, THAT'S IT FOR RIGHT NOW.
COUNCILMAN WILLIS, THANK YOU SO MUCH FOR THE PRESENTATION.
SO, UM, MR. ERIDGE, YOU MENTIONED, UH, YOU HAD STATISTICS FROM THE BUREAU OF OF LABOR STATISTICS ABOUT THE TURNOVER RATE FOR CITY EMPLOYEES AND IT, IT, IT TRACKS HIGHER THAN A STANDARD.
AND SO WHEN WE TALK ABOUT INCREASING THE EMPLOYEE MAXIMUM CONTRIBUTION TO 14%, I MEAN, I KNOW THAT'S A 0.62% INCREASE, BUT I'M WONDERING, ESPECIALLY WITH YOU HAVING WORN ANOTHER HAT BEFORE AN HR, UM, HOW WE FEEL ABOUT THAT AND THE IMPACT IT COULD HAVE ON EMPLOYEES, OR DO WE FEEL LIKE THIS IS SOMETHING THAT COULD BE BORN, UH, WITHOUT TOO MUCH OF A RIPPLE? ANOTHER GREAT QUESTION.
UH, I WOULD TELL YOU, REWINDING THE CLOCK BACK TO 2016, WE AGONIZED OVER THIS NEW TIER OF BENEFITS.
UH, WE EVEN DID SURVEYS FOR CONTRACTED, UH, SANITATION EMPLOYEES TO SEE IF THEY WOULD ACCEPT THE PERCENTAGE OF PAY.
WE HAVE HAD TWO OR THREE INCREASES.
I'M, I DON'T HAVE 'EM IN FRONT OF ME.
UH, BUT WE DO THINK THAT CAREFUL COMMUNICATION TO OUR EMPLOYEES, THEY WILL UNDERSTAND THE BENEFIT INCREASE BASED ON THE COST ANALYSIS OF WHAT THEY'RE RECEIVING.
WHAT WE ARE CONCERNED ABOUT IS GOING ABOVE THAT 14%.
THAT IS THE CONCERN THAT WE HAVE.
AND YES, WE WANNA MAKE SURE THAT WE DON'T REDUCE, OR I SHOULD SAY INCREASE THE 17%, UH, BY MAKING MASSIVE ADJUSTMENTS.
UH, BUT WE DO THINK THAT WE CAN PRESENT THE INCREASE AS IT IS, AS CHERYL SAID, ROUGHLY 1% AND WE THINK THAT EMPLOYEES WOULD ACCEPT ON THE TURNOVER RATE NUMBER.
YOU SAID 17% IS THAT REFLECTIVE OF THIS LAST YEAR? SO WE RECEIVED THIS NUMBER FROM THE HUMAN RESOURCES DEPARTMENT.
THIS IS FOR THE CALENDAR YEAR OF 2022.
SO IN THE CALENDAR YEAR OF 2022, THE TURNOVER RATE FOR CIVILIANS WAS 17%.
AND LIKEWISE, POLICE, UH, ONE AND FIRE 2.4.
AND I ASK THAT BECAUSE I KNOW THAT WE HAVE APPROVED ACROSS THE PAST TWO AND A HALF YEARS ADDITIONAL BENEFITS FOR EMPLOYEES.
UM, WE'VE, WE'VE ADDED, I MEAN, EVERYTHING FROM PET INSURANCE TO, UM, SOME OTHER THINGS THAT WERE REFLECTIVE OF WHAT WE WERE HEARING FROM CITY EMPLOYEES.
SO I'M, I'M HOPING THAT COULD BE SOME SORT OF OFFSET, I GUESS WE WON'T KNOW ABOUT WHAT THE TURNOVER RATE OR WHAT THE KIND OF IMPACT, UH, THAT THAT WOULD MAKE IN THE COURSE OF THIS LAST YEAR.
DO YOU KNOW WHEN WE, WE GET THESE NUMBERS, TYPICALLY, IS IT IN I, I GUESS IN Q1 24 THAT WE MIGHT KNOW WHAT THE TURNOVER RATE IS? I WOULD HAVE TO DEFER TO THE HUMAN RESOURCES DEPARTMENT TO ANSWER THOSE QUESTIONS.
UH, I WOULD JUST SAY HISTORICALLY WE'VE LOOKED AT 'EM AT A FISCAL YEAR, ON A FISCAL YEAR BASIS OR A CALENDAR YEAR BASIS.
IT REALLY DEPENDED ON THE NEEDS OF SERVICE AND THE IMPACTS, UH, FORECASTED.
WELL IT'S AN IMPORTANT NUMBER TO WATCH, OBVIOUSLY.
JUST TO MAKE SURE I UNDERSTAND THE RULES HERE, IT'S TWO QUESTIONS, BUT WHAT ABOUT LIKE STATEMENTS? TWO QUESTIONS.
YOU CAN MAKE A STATEMENT, YOU GONNA MAKE IT, YOU GONNA MAKE A STATEMENT? YOU GONNA MAKE A STATEMENT ANYWAY? GO AHEAD.
UM, JUST WANNA MAKE SURE I KNOW WHAT WE'RE TALKING ABOUT.
UM, SO THERE'S A LOT OF INFORMATION IN HERE AND I APPRECIATE THAT.
UM, AS A STATEMENT, I WILL SAY THAT, UM, YOUR ASSUMPTIONS ON THE GROWTH OF EMPLOYEES THAT YOU HAVE ON SLIDE 10 WHERE YOU'RE PROJECTING THREE AND A HALF PERCENT GROWTH AND THE ACTUAL HAS BEEN BELOW THAT, I HOPE THAT YOU IN THE FUTURE WE'LL REDUCE THAT ASSUMPTION.
UM, SO MY FIRST QUESTION'S GONNA BE, UM, ON YOUR SUMMARY OF CONSIDERATIONS.
UM, THERE'S MANY THINGS I AGREE WITH YOU ON.
YOU MAY SEE THAT I HAD TURNED INTO THE CHARTER REVIEW COMMITTEE FOR,
[00:25:01]
UM, ACTUALLY DETERMINE CONTRIBUTION RATE FOR BOTH OF OUR PLANS.UM, AND SO I THINK THAT'S JUST VERY GOOD PRACTICE AND I WAS REALLY HAPPY TO SEE THIS IN THE RECOMMENDATIONS.
UH, MY MY QUESTION FOR YOU IS GONNA BE ACTUALLY ABOUT A COUPLE OF THE OTHERS, AND I'M GONNA PUT 'EM TOGETHER SINCE I ONLY GET TWO QUESTIONS.
AND THE FIRST IS, YOU'RE NOTING THAT YOU'RE NOT REQUESTING BONDS AND YOU'RE EVEN TELLING US WHEN YOU THINK WE SHOULD HAVE AN ELECTION.
BUT IS YOUR ROLE TO TELL US THOSE THINGS OR IS YOUR ROLE TO TELL US WHAT FUNDING YOU NEED FOR YOUR PLAN? NO, WE'RE JUST GIVING A, A TIMELINE.
AND THE REASON WHY IS THAT OUR PLAN'S A LITTLE DIFFERENT FROM OTHERS.
SO IT IS A RECOMMENDED GUIDELINE.
UH, WE HAVE TO HAVE THE VOTERS APPROVE AT A, AT A, UH, SPECIAL OR GENERAL ELECTION, AT LEAST MAY OF 2024, NOVEMBER, 2024, MAY OF 2025.
AND THE DEADLINE FOR THE PRB IS SEPTEMBER 1ST, 2025.
AND SO THE CLOSER YOU GET TO THE DEADLINE, THE CLOSER THAT, UM, WE MAY NOT HAVE AN OPPORTUNITY TO, TO GET OUR SYSTEMS TOGETHER AND THINGS LIKE THAT, THAT'S, SO IT IS A RECOMMENDED, UM, UH, TIMELINE.
IT IS NOT, WE ARE NOT TELLING THE COUNCIL, YOU KNOW, WHAT TIME, WHAT, RIGHT, WHAT DATE, WHAT YOU SHOULD PICK.
BUT I THINK THAT FOR US, UM, IT, IT HELPS BECAUSE WE HAVE TO GET OURS APPROVED BY THE VOTERS.
OTHER PLANS ARE NOT LIKE THAT AND WE ONLY HAVE THREE OPPORTUNITIES TO DO THAT.
AND SO OUR VIEW IS IF WE CAN DO IT SOONER THAN LATER, IT WOULD HELP US AND WE WOULD GUARANTEE TO MAKE THE PRB DEADLINE.
SO THE PRB DEADLINE IS ACTUALLY, YOU'RE GONNA HAVE TO SUBMIT A PLAN BY SEPTEMBER OF, OF 24, IS THAT CORRECT? 2045, I'M SORRY, 9 1 20 25.
IT HAS TO BE IMPLEMENTED, LIKE EXECUTED, NOT, NOT SUBMITTED, BUT THE PLAN TO SUBMIT TO THEM THAT THEY HAVE TO APPROVE.
IS THAT NOT NEXT YEAR? WELL, FROM WHAT OUR DISCUSSIONS WITH THE PRB, THEY WANNA KNOW THAT IT'S ACTIONABLE AND FOR US, IT'S NOT ACTIONABLE UNTIL THE VOTERS VOTE ON IT.
SO I WOULD DISAGREE WITH THAT BECAUSE I DON'T THINK WE'RE GONNA HAVE ACTIONABLY TAKEN CARE OF THE OTHER PENSION EITHER BEFORE A PLAN HAS TO HAVE BEEN SUBMITTED.
AND SO WHAT I WOULD SAY IS THAT, UM, WE NEED A PLAN, AND I COMMEND OUR CHAIRMAN FOR WORKING HARD ON THIS AND FOR BRINGING US TOGETHER SO FREQUENTLY AND DOING THE EDUCATION THAT WE NEED, BUT WE DON'T ACTUALLY HAVE TO GO TO THE VOTERS IN MAY.
AND UM, I ALSO FEEL LIKE YOU MAY NOT GET AS FAVORABLE REACTION GOING IN MAY.
SO WHILE THAT IS A POLITICAL DECISION AND NOT, UM, A PENSION ONE, UM, THE, THE, THE NEXT THING I'M JUST GONNA ASK ABOUT IS THIS INFUSION OF CAPITAL.
AGAIN, I COMPLETELY AGREE WITH THAT BECAUSE OTHERWISE THE ACTUALLY DETERMINED CONTRIBUTION IS WAY, WAY HIGH.
UM, HAVE YOU CONSIDERED THAT WE MAY ALSO WANT TO PERHAPS SELL OFF ASSETS FOR OTHER PENSIONS? AND HOW WOULD WE MAKE THAT SPLIT? OR YOU'RE JUST SAYING ANY INFUSION WOULD BE HELPFUL? UH, I, I'M, I DON'T QUITE UNDERSTAND SELL OFF ASSETS FROM, FOR THE CITY TO SELL OFF ASSETS OR FOR, SO IF THE CITY SOLD OFF AN ASSET AND WE HAD $500 MILLION, IS THERE, IS, ARE, ARE YOU SAYING IN HERE THAT YOU THINK IT SHOULD GO TO ERF COMPARED TO GOING TO SOMEWHERE ELSE? OH NO, WE ARE NOT TELLING THE CITY HOW TO GET THE MONEY OR WHAT TO DO WITH THE MONEY.
WE ARE JUST GIVING THE OPTIONALITY WITHIN THE DOCUMENT THAT IF YOU WANTED TO INFUSE A CAPITAL, UH, OF ANY AMOUNT AT ANY TIME, THAT IS, THAT IS OPEN.
WE'RE NOT TELLING YOU HOW TO DO IT.
I THINK THAT APPROACH IS PROBABLY, UM, VERY MUCH IN LINE WITH THIS NEXT PRESENTATION.
IF I COULD MAKE ONE COMMENT, I JUST WANNA SAY I'M JUST REALLY PLEASED WITH THE FACT THAT THE LAST, UM, TIME WE PUT IT ON THE BALLOT, THE VOTER VOTERS APPROVED IT BY 69% AND WE GOT A LOT OF PHONE CALLS FROM VOTERS AND SO THEY UNDERSTOOD WHAT THEY WERE VOTING ON.
AND UM, SO WE WERE HAPPY THAT, UM, THAT WITH THE 69% VOTE, THAT WE, UH, FEEL, WE FEEL GOOD THAT THEY, THEY, THE VOTERS WILL STRIVE TO UNDERSTAND THE BALLOT AND, AND VOTE ACCORDINGLY.
UM, CHAIRMAN STEWART, THANK YOU.
UM, I'M GONNA APOLOGIZE IN ADVANCE.
YOU MAY HAVE ALREADY ANSWERED THIS QUESTION, BUT I, AND WE SEEM TO BE HYPERLY FOCUSED ON THIS, UH, PROJECTED RATE OF GROWTH OF EMPLOYMENT AT 3.5%.
WHERE DOES THAT NUMBER COME FROM? IS THAT JUST A GENERALLY ACCEPTED INDUSTRY STANDARD OR, UH, FOR A NUMBER OF YEARS OUR ACTUARY HAS USED THAT AS A GROWTH, UH, BASED ON PAST PERFORMANCE OF THE CITY'S HIRING.
AND SO IT'S REALLY A MATTER OF HEAD COUNT AGAIN.
UM, UH, BUT CERTAINLY, UH, FROM THE WISDOM OF THIS COUNCIL, WE ARE ALWAYS HAPPY TO TAKE A LOOK AT IT AND HAVE OUR ACTUARIES LOOK AT IT.
BUT IT'S BEEN THE HISTORY OF THE PERCENTAGE OF
[00:30:01]
HIRES.UM, AND IF GOING FORWARD, FOR EXAMPLE, HOLD ON.
I JUST WANNA MAKE SURE DAVID, IS THAT A GROWTH IN HEADCOUNT OR IS THAT ALSO GROWTH IN PAYROLL? GREAT QUESTION.
SO HEADCOUNT EQUALS ALSO A GROWTH IN PAYROLL.
SO IT COULD BE EXISTING HEAD COUNT WITH HIGHER PAY FROM ANNUAL MERIT AND WITH ANNUAL MERIT.
THANK YOU JACK FOR CLARIFYING THAT.
YEAH, I GUESS I'M JUST WORRIED ABOUT THIS OUTSOURCING.
IT'S, I DON'T KNOW THAT THIS CITY IS GOING TO OUTSOURCE, SO NO HEADLINES, NO PANIC, NO WHATEVER.
THIS IS JUST WHAT'S GOING ON IN MY HEAD.
UM, SO IF THERE WAS A TREND TOWARDS OUTSOURCING JOBS, IT MIGHT BE OFFSET WITH, UH, PAYROLL GOING UP.
SO WE MIGHT STILL BE AT THAT 3.5%.
I JUST WANT US TO BE REALLY, REALLY THOUGHTFUL AND KIND OF GO RUN THROUGH ALL THE DIFFERENT SCENARIOS, WHICH I KNOW MR. IRELAND WILL DO QUITE WELL.
UM, AND MAKE SURE, BECAUSE IF WE, IF WE OVER PROJECT AND WE UNDERPERFORM IN THAT I, THAT I THINK THAT'S BEEN AN ISSUE IN THE PAST AND IT'S A, IT SEEMS LIKE AN EASY FIX.
MAYBE IT'S NOT AN EASY FIX 'CAUSE IT WILL IMPACT A LOT OF THINGS, BUT IT IS SOMETHING I THINK WE COULD, WE COULD DO A REALLY GOOD JOB OF PROJECTING, RIGHT? WE COULD REALLY DRILL INTO THIS AND MAKE SURE THIS IS THE RIGHT NUMBER AND THEN MAYBE EVEN JUST COME DOWN A LITTLE BIT JUST TO BE CONSERVATIVE, JUST TO, SO THAT WE DON'T OVER PROJECT THE, THAT INCREASE OVER TIME AND WE DON'T, AREN'T THEN PERHAPS LOOKING AT THIS SITUATION IN THE FUTURE.
'CAUSE IF THERE'S ANYTHING ELSE, ANYTHING WE DON'T WANT TO HAVE HAPPEN IS TO RE REVISIT THIS SCENARIO.
UM, AND THEN I JUST NEGLECTED TO WRITE DOWN THESE TWO PERCENTAGES, BUT YOU SAID AT THE END OF THIS 30 YEAR PERIOD ARE THE NORMAL COSTS WOULD GO DOWN TO, AND I JUST DIDN'T, I WROTE DOWN 9% AND THEN I DIDN'T YES.
IF YOU GO TO SLIDE 14, THE PHASE IN SCENARIO.
WELL IT'S ACTUALLY THIS SLIDE, THE CHART, SLIDE 14.
SO YOU'LL SEE THAT, UM, IT STEPS UP 2% AND THEN, UM, WHEN THE UNFUNDED ACTUARIAL ACCRUED LIABILITY IS PAID OFF, THE NORMAL COST FOR THE PLAN IS 14.5%.
AND SO THE CITY'S CONTRIBUTION RATE WOULD GO TO 9% AND THE EMPLOYEES TO 5.5%.
THANK YOU SO MUCH, CHAIRMAN MARINA.
UM, STICKING ON THE EMPLOYMENT SIDE, IS THERE A CORRELATION WITH THE EMPLOYEE GROWTH, WITH THE POPULATION GROWTH IN, IN MAKING THE SERVICES? YOU KNOW, IF THE THE CITY'S GROWING, WE, WE NEED ADDITIONAL SERVICES.
AGAIN, I WOULD HAVE TO EITHER TURN TO THE HR DEPARTMENT OR TO OUR CFO FOR THAT.
WE, WE PRETTY MUCH ACCEPT THE CONDITIONS THAT HAVE OCCURRED THROUGH THE BUDGET PROCESS.
AND SO WE DON'T FORECAST, UH, ANY GROWTH OTHER THAN WHAT THE BUDGET TELLS US AND ALSO WHAT THE PAST PERFORMANCE HAS BEEN.
AND SO I DON'T, I DON'T THINK WE COULD FORECAST THAT FOR YOU.
THE NEXT QUESTION'S GONNA BE ON THE POTENTIAL OF A BOND.
UM, WOULD THAT INFUSION BE, TYPICALLY BONDS ARE OVER FIVE TO SEVEN YEARS, SO WOULD WE SEE THAT INFUSION IN, IN, IN ONE YEAR OR OVER A SEVEN YEAR PERIOD? SO I, I GUESS I'M
WE ARE NOT, UH, SAYING THAT IT HAS TO BE, UH, WE'RE NOT LINKING IT TO ANY TYPE OF BOND ISSUANCE AT ALL.
UH, SO, BUT, BUT IF THAT WAS SOMETHING THAT WE WERE EXPLORING, WE ARE, WE ARE NOT EXPLORING, UH, A BOND ISSUANCE AT THIS POINT.
UH, SO ANY INFUSION FROM ANY SOURCE OF CAPITAL THAT THE CITY MAY HAVE FROM, UM, IT'S UP TO, IT'S UP TO THE COUNCIL TO DETERMINE WHAT THAT IS.
BUT, UH, WE, BUT RIGHT AT THIS POINT OUR RECOMMENDATION IS WE ARE, WE'RE NOT REQUESTING A BOND ISSUANCE FOR US.
GRAYSON, YOU ANYTHING? OH, HI REZA, YOU HAVE A QUESTION? I THINK CHAD WESTNER WENT OUT.
CHAD, CAN YOU HEAR ME? IF YOU CAN.
SO BACK TO THE EMPLOYEE COUNT, YOU'RE SHOWING THAT 1100 ARE POTENTIALLY ELIGIBLE IN LOOKING AT THE 74 64, THAT MEANS 15% OF OUR WORKFORCE COULD RETIRE TODAY? THAT'S CORRECT.
DO WE HAVE A PLAN FOR THAT? BECAUSE I MEAN, I ASSUME WE'RE GONNA TRY TO FILL POSITIONS, BUT YOU KNOW, THAT'S A
[00:35:01]
BIG $12 MILLION, THAT'S A GAP.AND I'M NOT SAYING IT'S GONNA HAPPEN TODAY, BUT IF THEY'RE ELIGIBLE TO RETIRE, THAT'S, YOU KNOW, I'M JUST WONDERING DO WE HAVE A PLAN? SO, UH, FOR POLICE AND FIRE, THERE HAVE BEEN A COUPLE OF ACTIONS PUT IN PLACE TO HELP RETAIN OFFICERS THAT MAY BE AT THAT RETIREMENT AGE TO KEEP THEM IN THE SYSTEM LONGER.
WE DO NOT HAVE A SIMILAR THING FOR CIVILIANS, BUT WE DO HAVE BOTH ON BOTH SIDES, UNIFORM AND NON-UNIFORM, VERY HIGH PERCENT THAT HAVE BEEN HERE A REALLY LONG TIME AND HAVE ACHIEVED ELIGIBILITY.
SO I WOULD ASSUME THOSE POSITIONS WOULD GO OUT AND WE WOULD INTERVIEW AND HOPEFULLY YES, ABSOLUTELY.
AND NOT JUST ABSORB, I MEAN, 'CAUSE ABSOLUTELY WE WOULD THOSE PROTECTIONS TRY TO FILL THOSE POSITIONS IF THEY BECAME VACANT.
COUNCILMAN WILLIS? YEAH, JUST TO FOLLOW UP ON THE TIMING OF, UM, VOTERS LOOKING AT DRAFT CHANGES THAT, THAT YOU PROPOSED, AND YOU'RE JUST SAYING THAT YOU'D LIKE THIS DONE ON THE EARLIER SIDE IN IN MAY IF POSSIBLE.
WE WANNA BE CONSERVATIVE AND SO WE WANNA GIVE US, UH, ENOUGH TIME IN ORDER TO CHANGE THE CHANGES.
AND ALSO WHAT'S REALLY IMPORTANT TO NOTE IS THAT WE ARE THE ONLY PLAN THAT NEEDS VOTER APPROVAL.
SO LINKING IT'S NOT THE PROCESS OF APPROVAL IS TWO SEPARATE PROCESSES.
SO THE, UH, GOING TO THE VOTERS TO APPROVE THE CHANGES IN CHAPTER 40 A IS REQUIRED OTHER PLAN, THE OTHER PLAN DOES NOT NEED THAT AT ALL.
SO IT'S, THE TWO PROCESSES ARE SEPARATE, SO YOU DON'T HAVE TO BE LINKED TO THAT IN ANY WAY, RIGHT? CORRECT.
AND UM, AND REALLY THIS IS JUST TIMING.
I MEAN, I'M, I APPRECIATE YOU SHARING THAT, THAT PERCENTAGE OF, UH, APPROVAL, 69% VOTER APPROVAL THE LAST TIME ANYTHING WENT BEFORE THEM, BEFORE THE ERF, SO, SO THAT'S GOOD TO KNOW.
ALRIGHT, WELL THANK YOU FOR ESTABLISHING THAT SEPARATION.
UM, SO GOING BACK TO A STATEMENT, I'LL JUST SAY THAT YOU HAD THAT VOTER APPROVAL, BUT YOU DIDN'T HAVE A POLICE FIRE PENSION HANGING OUT THERE AND JUST LOOKING AT THE FACES OF SOME OF THE PEOPLE IN THIS AUDIENCE, I ASSURE YOU THEY'RE NOT GONNA LET THIS ERF PASS BEFORE THEIR PENSION'S ADDRESSED.
SO I THINK, IS THAT A STATEMENT OR A QUESTION IS THAT'S A STATEMENT.
OKAY, LET'S, LET'S STICK WITH A QUESTION, PLEASE.
SO, UM, MY QUESTION, THIS FIRST QUESTION IS, YOU CREATED A NEW CLASS THE LAST TIME THE PENSION WAS ADDRESSED, AND DID THE EXISTING CLASS HAVE ANY REDUCTION IN BENEFITS? DID THAT EXISTING CLASS, UM, CHANGE THEIR CONTRIBUTION AT THAT TIME? SO REMEMBER AGAIN, WE STATED, AND I WANNA BE EMPHATIC ABOUT ANSWERING THE QUESTION, SO I'M TRYING TO GET TO THE SLIDE.
SO ON SLIDE EIGHT, THESE ARE THE ACTION STEPS THAT, UH, WE TOOK TO REDUCE, THAT EQUATED TO A 39% REDUCTION OF THE TIER A PLAN TO CREATE A TIER B PLAN.
IN OTHER WORDS, WE LOOKED AT THE TIER A PLAN AND SAID, WHAT COULD WE REDUCE TO ACCOMMODATE THE GOAL AT THAT TIME? AND THESE ARE THE STEPS, UH, THE ACTIONS OF REDUCTIONS THAT WE SAID.
SO I JUST WANNA CLARIFY WHAT YOUR ANSWER IS.
SO YOU'RE SAYING THAT THE EXISTING CLASS HAD THESE SEVEN THINGS HAPPEN OR THE NEW CLASS HAD THOSE SEVEN THINGS HAPPEN? NO, GREAT QUESTION.
SO THE EXISTING MEMBERS, I MEAN, I'M JUST TRYING TO MAKE SURE I UNDERSTAND YOUR ANSWER.
THE EXISTING MEMBERS OF ERF HAD NO CHANGE IN BENEFITS OR ANY OF THESE SEVEN ITEMS. THEY HAD NO CHANGES.
ONLY THE NEW CLASS WAS CHANGED THE LAST TIME YOUR PENSION WAS ADDRESSED.
AND, AND JUST TO BE EMPHATIC, IT'S A DIFFERENCE BETWEEN TIER A BEING THE CLASS BEFORE THE CHANGES OF JANUARY, 2017 AND THEN TIER B THEREAFTER.
AND SO YOU'RE CORRECT, THE TIER A MEMBERS HAD NO CHANGES, THE NEW HIRES AND THE NEW PLAN THAT WAS OFFERED TO THE NEW HIRES HAD THE REDUCTIONS, BUT THE PERCENTAGES, UH, DID CHANGE.
AND I JUST WANTED TO POINT OUT THE GOAL WAS TO CHANGE TO, UH, UH, ACTUALLY AVOID $2.15 BILLION OVER TIME.
52% OF THE WORKFORCE CIVILIAN WORKFORCE TODAY, OUR TRA AND THE BALANCE 48% OUR TIER B.
SO WE'RE WORKING THROUGH THE GOAL.
WHAT HAS CHANGED HAS BEEN THE PRB EXPECTATIONS.
UM, SO THE SECOND QUESTION I HAVE THEN IS, UH, YOU HAVE UNDER YOUR RECOMMENDATIONS ON SLIDE 17 TO INCREASE EMPLOYEE CONTRIBUTION RATE TO A MAXIMUM OF 14%.
HOW DOES THAT COMPARE TO THE POLICE FIRE EMPLOYEE CONTRIBUTION? UM, AND I KNOW YOU WERE TALKING ABOUT SOME OF THE OTHER CITIES AND HOW THERE'S, THERE'S IS UM, GOING COMPARE, BUT IT SEEMS TO BE SORT OF SELECTED CITIES.
SO I'M WONDERING IF YOU CAN MAYBE JUST ANSWER HOW THAT COMPARES TO THE, THE POLICE FIRE.
SO FOR, I, I DON'T KNOW WHAT THE, UH, POLICE AND FIRE'S CONTRIBUTION
[00:40:01]
RATE IS.UM, SO I DID NOT COMPARE OUR CONTRIBUTION RATE TO THEIRS.
WHAT WE'RE LOOKING AT IS CIVILIAN EMPLOYEES.
UM, AND, AND AT THIS POINT WHEN WE'RE LOOKING AT OUR RECOMMENDATION, UH, THE EMPLOYEES ARE, ARE, UM, GOING TO CONTRIBUTE AS WELL TOWARD THIS SOLUTION.
SO WE DID NOT DO ANY COMPARISON WITH ANY ORGANIZATION.
WE THOUGHT IT WAS MORE APPROPRIATE TO COMPARE TO OTHER CIVILIAN PLANS.
AND SO WHEN WE LOOKED AT OUR COMPARISON THAT WE, UH, PICKED UP ON PAGE 15, WHICH IS A COMPARABLE CONTRIBUTION RATES, THE REASON WE PICKED THESE CITIES WAS BECAUSE THEY WERE LARGE CITIES LIKE DALLAS AND WE WANTED TO PICK A GROUP THAT WAS A COMPARABLE SIZE.
SO WE FELT, UM, AUSTIN FORT WORTH HOUSTON WERE MORE COMPARABLE TO DALLAS THAN SOME SMALL, SMALLER, UH, CITY WITHIN TEXAS.
SO WE FELT THAT IT WAS MORE APPROPRIATE BECAUSE THE DIFFERENCE BETWEEN, UH, THE CIVILIAN EMPLOYEES AND THEIR SALARY AND TOTAL COMP IS VERY DIFFERENT THAN, UH, POLICE AND FIRE, UM, UH, TOTAL COMP AS WELL.
SO THAT'S WHY WE WANTED TO COMPARE APPLES TO APPLES, WHICH WAS CIVILIAN PLANS, TO OTHER CIVILIAN PLANS.
UM, BUT I DON'T THINK THE QUESTION WAS ACTUALLY ANSWERED.
PERHAPS, PERHAPS JACK COULD ANSWER IT.
SO THE, THE QUESTION THAT I HAD ASKED, UM, THEY SAID THEY WERE NOT PREPARED TO ANSWER, WHICH IS FINE.
NO, I, I DON'T KNOW Y'ALL, I UNDERSTAND, BUT THE QUESTION I'M ASKING IS FOR THE ERF PLAN, THEY HAVE THE THIRD BULLET ON, UH, SLIDE NUMBER 17 SAYING TO INCREASE EMPLOYEE CONTRIBUTION RATE TO A MAXIMUM OF 14%.
AND MY QUESTION IS, HOW DOES THAT COMPARE TO THE POLICE FIRE PENSION PLAN? THESE ARE ALL OF OUR EMPLOYEES.
SO THE CURRENT CONTRIBUTION RATE FOR POLICE AND FIRE IS 13.5 FOR THE EMPLOYEES AND THEIR, UH, PRESENTATION DOES NOT PROPOSE ANY CHANGES TO THAT.
THIS YOUR LAST QUESTION, BUT I'M, I'M JUST MAKING SURE I ANSWER, BUT, SO RIGHT NOW THE EMPLOYEES ARE PAYING 12, IS THAT RIGHT? 5%? NO, NO, NO.
THEY'RE PAYING 13.38 AND THEN WE GO TO 13.38.
UH, I I'M TRYING TO MAKE A CLARITY RIGHT HERE.
UH, THE EMPLOYEES, UM, COMPARISON TO THEIR EMPLOYEES, THEY'RE TRYING TO COMPARE EMPLOYEES TO EMPLOYEES IN UNIFORM TRYING TO COMPARE UNIFORM UNIFORM.
IS THAT A FAIR STATEMENT? JACK? IT IT'S REALLY DIFFICULT TO COMPARE THE TWO CLASSES BECAUSE THE BENEFITS ARE DIFFERENT.
THE PAY, THE CURRENT PAY FOR ACTIVE EMPLOYEES ARE DIFFERENT.
POLICE AND FIRE RECEIVED A 5% PAY INCREASE THIS YEAR.
UH, CIVILIANS ONLY RECEIVED A 3%.
SO THERE'S NOT A TRUE COMPARISON ON ALL OF THE DIFFERENT ASPECTS OF THE COMPENSATION PACKAGE.
I DON'T WANNA PUT THAT OUT THERE, YOU KNOW, Y'ALL WAS NOT PREPARED FOR THAT.
I WANNA MAKE SURE THE PEOPLE WHO LISTEN THERE IS NOT A COMPARISON.
UH, OTHER THING, LET'S GET BACK SINCE, UH, CHAIRMAN MEDICINE BROUGHT UP THE ELECTION, IT WAS NOT ELECTION FOR A BOND PACKET OR TRYING TO GET BENEFIT, IT'S SOMETHING THAT Y'ALL WERE TRYING TO GET A DEADLINE BECAUSE IF YOU DO NOT MAKE MEET THAT DEADLINE, THEY WILL SHRINK THAT WINNER FROM 30 YEARS TO 25.
SO THAT'S THE REASON WHY YOU'RE TRYING TO GET THE ELECTION.
IS THAT CORRECT? THAT IS CORRECT.
YOU WANNA REPEAT THAT AGAIN? SO EVERYBODY UNDERSTAND THE REASON BECAUSE YOU HAVE SOME ISSUE HOW TO MEET THAT DEADLINE? YEAH, AS CHERYL HAS STATED, WE HAVE, WE HAVE RECOMMENDED, AND FOR YOUR CONSIDERATION A VERY CONSERVATIVE APPROACH.
WE GO TO THE NEXT MAY, MAY, 2024, THAT GIVES US THE TIME TO GET THE APPROVAL FROM THE PENSION REVIEW BOARD, COMMUNICATE TO OUR EMPLOYEES, BUT ALSO CHANGE OVER OUR PENSION ACCOUNTING SYSTEM.
THOSE THREE THINGS WILL TAKE TIME.
AND SO WE'RE THINKING THAT IF WE CAN GET IT DONE SOONER RATHER THAN LATER, WE REDUCE OUR RISK.
IF WE DO NOT, IF WE MISS THAT DEADLINE, WHAT DO IT COST YOU? THE AMORTIZATION GOES FROM 30 YEARS TO 25 YEARS.
SO IN DOLLARS CONTRIBUTION, YOU DON'T HAVE AN ANSWER NOW.
IF YOU CAN, WILL YOU GIVE US AN OUNCE BEFORE, YOU KNOW, NEXT WEEK SOMETIME FOR THE NEXT MEETING? WE CAN DEFINITELY COME BACK AND PROVIDE YOU THAT INFORMATION.
WITH THAT, UH, WE GOING GO WITH THE NEXT BRIEFING, UH, UNLESS, UH, HAMMOND
AND NEXT ONE WOULD BE, UH, THE CITA DOUBT AD HOC COMMITTED BRIEFING WITH BILL QUINN, JOHN STEVEN AND ROD WALTER.
[00:45:01]
LEMME TURN THIS OVER TO, UH, BILL QUIN WILL GET US STARTED AND I'LL SUPPLEMENT.UH, I'LL INTRODUCE OR UH, TURN OVER TO BILL QUINN AND LET HIM GET STARTED AND THEN I'LL HAVE A FEW SUPPLEMENTAL OBSERVATIONS ABOUT THE SPECIFIC RECOMMENDATIONS.
YEAH, ROB'S UH, HAVING A LITTLE PROBLEM RIGHT NOW WITH YOU NEED SOME WATER OR SOMETHING? OH, I'M GOOD, I'M GOOD.
UH, THANK YOU FOR BEING HERE, CHAIRMAN, APPLICANTS OTHER CITY COUNCIL MEMBERS.
UM, WHEN I INITIALLY WAS ASKED TO BE THE CHAIR OF THE DPFP BILL, WILL YOU PUT YOUR MIC A LITTLE CLOSER TO YOU? A LITTLE BIT MORE? BACK IN 2017 BY MAYOR RAWLINGS, I, I ACCEPTED BECAUSE I COME FROM A FAMILY OF POLICE OFFICERS.
MY DAD WAS A POLICE OFFICER AND MY TWIN BROTHER WAS A POLICE OFFICER IN NEW YORK.
AND SO I KNEW HOW IMPORTANT PENSIONS WERE, SO WHATEVER I COULD DO, I WANTED TO DO.
BUT IT WASN'T LONG INTO THAT REVIEW DID WE REALIZE WHAT HAPPENED IN HOUSE BILL 31 58.
IT WAS JUST PUTTING A TOURNIQUET ON THE BLEEDING AND STOPPING THE BLEEDING, AND THAT DID, WE REALLY NEEDED A LONG-TERM SOLUTION.
SO WE STARTED, OR I STARTED THINKING ABOUT THOSE THINGS GOING BACK TO 2017, AND I'M GLAD THAT WE'RE HERE TODAY TO PRESENT SOME OF THOSE OPTIONS AS WELL AS TO, UH, SAY THAT WE, OUR ASSIGNMENTS SORT OF EVOLVED ALSO TO, UH, SORT OF HELP THE CITY DRAFT A PLAN THAT HAS TO GO TO THE PRB BY NEXT YEAR THAT WE THINK WILL BE A CREDIBLE PLAN.
WITH THAT, WE CAN GO TO THE FIRST SLIDE.
I'M NOT GONNA GO OVER A LOT OF THE DETAIL HERE.
I JUST WANTED TO POINT OUT A COUPLE OF QUICK HIGHLIGHTS ON THAT.
THE REAL ESTATE INVESTMENTS OF A BILLION DOLLARS WERE NOT THE ONLY ILLIQUID IN BAD INVESTMENTS.
WE HAD ABOUT A $600 MILLION IN PRIVATE EQUITY INVESTMENTS AS WELL.
UM, SINCE 2016 17, THE STAFF AT DPFP HAS DONE A GREAT JOB OF GETTING THAT DOWN.
AND WE'VE SOLD OVER A BILLION DOLLARS WORTH OF ASSETS SO THAT WE COULD PUT 'EM INTO LIQUID TYPES OF INVESTMENTS THAT WE WOULD GET NORMAL RETURNS.
UH, ONE OF THE REASONS OUR RETURNS ARE WHERE THEY ARE IS THAT WE HAD THIS BILLION SIX OF ASSETS EARNING NO RETURN OR NEGATIVE RETURNS DURING THE PERIOD.
WE ALSO, BECAUSE OF THE NEGATIVE CASH FLOW IN THE PLAN, HAD TO PUT SOME MONEY INTO ABOUT 120, $150 MILLION INTO THE LOW RISK, UH, LOWER INTEREST, VARYING FIXED INCOME INSTRUMENTS, WHICH IMPACTED THE RETURNS.
UH, SO I THINK WE'VE, YOU KNOW, GIVEN THE CIRCUMSTANCES WE'VE DONE VERY WELL, I DON'T THINK WE NEED TO TALK ABOUT DROP ANYMORE.
THAT'S, UH, WELL, WELL KNOWN AND, AND WELL VERSED ON, BUT THE LEGISLATION DIDN'T FULLY RESOLVE THE PROBLEM, AS I SAID, UH, AND, AND REALLY PUT US IN A SITUATION WHERE WE DID HAVE AN ONGOING NEGATIVE CASH FLOW OF ABOUT A HUNDRED TO $120 MILLION.
BUT THE PLAN THERE WAS TO GIVE CERTAINTY TO THE CITY ON CONTRIBUTIONS OVER THE NEXT SIX OR SEVEN YEARS.
AND IT WAS NOT, YOU KNOW, THE LEGISLATION WASN'T INTENDED TO BE A LONG-TERM SOLUTION, BUT NOW HERE WE ARE LOOKING AT HAVING TO COME UP WITH THAT LONG-TERM SOLUTION.
ON THE NEXT SLIDE, I'LL SEE IN THE STATE.
UH, PRB, THE RULE UNDER 31 58 IS THAT THE INDEPENDENT ACTUARY HAD TO BE HIRED BY DPFP AND ULTIMATELY CHIRON WAS SELECTED EARLY.
UH, WE WANTED TO GET THE PROCESS GOING FASTER AND, AND MOVE ON.
AND ACTUALLY YOU SAW THE PRELIMINARY RESULTS IN NOVEMBER.
THE FINAL WILL BE DONE IN FEBRUARY.
UM, AT THAT TIME, WE'LL HAVE A, A PRETTY GOOD THING.
I WON'T COMMENT ON THINGS THAT YOU SHOULD BE AWARE OF.
I MEAN, PROBABLY THE 2022 UH, VALUATION WILL BE A LOOK, UH, A LITTLE BIT, UH, BETTER.
OR ACTUALLY THE 2123 VALUATION WILL LOOK A LITTLE WORSE BECAUSE WE'VE HAD ANOTHER YEAR OF NEGATIVE CASH FLOW.
UH, BUT WHEN WE GO TO 1 1 24, UH, WE, I EXPECT THAT IT'LL BE A LOT BETTER BECAUSE WE'VE HAD A 17% RETURN ON OUR ASSETS OVER THE LAST, UH, 12 MONTHS.
SO IT'S, YOU KNOW, WE'RE ONE YEAR IN ARREARS ON VALUATIONS ALL THE TIME.
SO YOU ARE SORT OF WORKING WITH, UH, LOOKING IN A REAR VIEW MIRROR, BUT THINGS HAVE IMPROVED OVER THERE.
UM, ONE THING I FOUND INTERESTING THAT I DON'T KNOW THAT WE'VE TALKED ABOUT, BUT THE MANDATE UNDER 31 58 IS A MANDATE FOR THE TFP BOARD, NOT THE CITY.
HOWEVER, THERE'S NO WAY THAT THE DFP BOARD CAN COME UP WITH MONEY TO FUND THESE THINGS.
SO THE CITY AND AND THE BOARD HAVE TO WORK HAND IN HAND ON DOING THAT.
UM, AND SO I THINK THAT'S STILL AN ISSUE.
WE SORT OF GOTTA WORK AT THE BOARD WOULD PROBABLY WANT MORE MONEY SOONER THAN WE THINK IS A REASONABLE AT THIS POINT IN TIME, GIVEN EVERYTHING ELSE THAT'S GOING ON.
BUT WE REALLY DO THINK THAT'S GONNA
[00:50:01]
BE AN ISSUE.UM, THE NEXT SLIDE, SLIDE FIVE.
UM, SINCE OUR LAST TIME, AGAIN, YOU'VE SEEN THIS SLIDE BEFORE, BUT AS I MENTIONED BEFORE, WE'VE SOLD 900 MILLION TO A BILLION DOLLARS IN ILLIQUID ASSETS AND HAVE PUT 'EM INTO MORE APPROPRIATE INVESTMENTS.
WE'VE GIVEN A LEVEL OF OUTFLOWS, WE DID MAINTAIN LOWER AN ALLOCATION TO LOWER INTEREST, LOWER RISK BONDS, AND, BUT WE HAVE NOW RESTRUCTURED THE PORTFOLIO TO WHERE 65% OF THE ASSETS THAT WERE IN PRIVATE MARKETS IS DOWN TO LESS THAN 10%.
AND WE'VE GOT A SIGNIFICANT AMOUNT OF MONEY IN PUBLIC MARKETS THAT ARE DOING QUITE WELL.
UM, MATTER OF FACT, OVER THE LAST ONE, THREE, AND FIVE YEARS, AS WE LOOK AT THE INVESTMENT PERFORMANCE RELATIVE TO A HISTORICALLY STANDARD BENCHMARK OF 60 40, THE FUNDS HAVE ACTUALLY OUTPERFORMED IN EACH OF THE ONE, THREE AND FIVE YEAR PERIODS OF TIME.
UH, WE'RE STILL BURDENED BY THE, UH, BACK HISTORY OF, UH, ILLIQUID ASSETS AND AS, AS I SAID, THERE'S STILL OVER $500 MILLION IN, IN THOSE ASSETS.
THE NEXT SLIDE IS JUST AN ILLUSTRATION OF HOW THE ASSET ALLOCATION HAS SHIFTED AND YOU CAN SEE THE GLOBAL EQUITY, WHICH IS OUR BIGGEST ALLOCATION, WAS DOWN ALMOST AT UNDER 10% AND BACK IN 2017.
AND NOW WE'VE GOT IT BACK TO A MEANINGFUL, WE'RE STILL SHORT OF WHERE WE WANT TO BE.
WE NEED TO GET ANOTHER 10%, 15% INTO THOSE ASSETS, BUT WE'VE MADE GREAT PROGRESS IN DOING THAT.
NEXT SLIDE, UH, TALKS ABOUT THE FUNDING STATUS.
AS I SAID, IT'S 41% FUNDED AT AS OF JANUARY 1 22.
I THINK IT'LL BE A LITTLE WORSE IN 1 1 23 BEFORE GETTING BETTER.
UH, THE ACTUAL NUMBERS AS OF 1 1 22 ARE 5.2 BILLION IN LIABILITIES AND 1.8 BILLION IN ASSETS.
SO WE'VE GOT A 3.4 BILLION UNDERFUNDED SITUATION AT THE CURRENT CURRENT TIME.
NOW 70% OF THE LIABILITIES IS DUE TO RETIREES, NOT TO THE ACTIVES.
SO THAT'S THE BIG CHUNK THAT HAS TO BE AMORTIZED OVER TIME.
AND AS WAS JUST TALKED ABOUT, THE REGULAR UH, CONTRIBUTION FROM THE CITY IS 34.5% PLUS A $13 MILLION ANNUAL CONTRIBUTION ABOVE THAT PAYROLL NUMBER.
AND THE CITY'S EMPLOYEES ARE AT 13.5%.
AND ONCE AGAIN, WE HIGHLIGHT THAT, YOU KNOW, WE STILL ARE IN A NEGATIVE CASH FLOW, SO WE REALLY NEED SOME HELP.
THE NEXT CHART JUST SHOWS UNDER THE CURRENT PROJECTIONS WHEN WE WILL BE GET TO DIFFERENT FUNDING LEVELS.
UH, WE'RE GONNA BE OUT TO 2090 BASICALLY UNDER CURRENT ASSUMPTIONS AND THE CURRENT FUNDING PROJECTIONS BEFORE WE GET TO A HUNDRED PERCENT, WE STILL GET, GET OUT TO ABOUT 2070 OR 72 JUST TO GET TO THE 70% LEVEL.
SO IT UNDER THE CURRENT SITUATION IS JUST UNTENABLE.
THE NEXT CHART, I THINK IS A REALLY A KEY ONE.
IT SHOWS UNDER DIFFERENT LEVELS OF MAKING A ONE-TIME CONTRIBUTION, UH, FROM ASSETS OR FROM OTHER THINGS.
WHAT WOULD THAT DO TO BRINGING IN THE FUNDING LEVELS AT WHAT PERIODS OF TIME? SO WE COULD GET WITH A $500 MILLION CONTRIBUTION, WE'RE PROBABLY STILL GONNA BE OUT THERE QUITE A WAYS, BUT WE'D GET TO 70% IN AROUND 2067 WITH A BILLION.
WE GET A HUNDRED PERCENT FUNDED IN 2055 AND A BILLION, UH, 70% FUNDED IN 2043.
SO BY MAKING MAJOR CONTRIBUTIONS TO THE PLAN, IT'LL HAVE A MAJOR IMPACT, OBVIOUSLY ON THE FUNDING STATUS, BUT IT ALSO WILL MAKE A MAJOR IMPACT ON WHAT OUR CONTRIBUTIONS WILL BE GOING FORWARD.
WE'RE GONNA TALK A LITTLE BIT ABOUT, UH, ACTUARILY DETERMINED CONTRIBUTIONS AND HOW THEY FLUCTUATE AND WHAT A CONTRIBUTION WOULD DO TO THOSE.
WE ALSO, ON THE NEXT SLIDE, JUST AS A, AN OUTLINE OF THE MEETINGS TO DATE AND CHAIRMAN ATKINS WILL BE ADDING TO THIS AS WE GO FORWARD.
SO, UH, THERE'S NOT MUCH REALLY TO SAY HERE OTHER THAN WE'VE GOT, WE'VE MET ALL OF THESE DEADLINES AND WE'RE HERE TODAY WITH PRESENTATION OF OUR RECOMMENDATIONS.
ON THE NEXT SLIDE JUST OUTLINES THAT, I MEAN THE BULK OF THE WORK HAS BEEN DONE, UH, BY MYSELF, JOHN STEVENS AND ROB WALTERS HERE.
I'VE SPENDING AN AWFUL LOT OF TIME AND PART OF THAT IS BECAUSE NOT ONLY HAVE WE BEEN LOOKING AT FUNDING OPTIONS AND ASSETS, WE'VE GOTTEN INVOLVED IN THE CHIRON ANALYSIS BEYOND WHAT WE'VE INITIALLY HAD ANTICIPATED, AND WE'VE ALSO SPENT A LOT OF TIME WITH THE PLAN THAT WE'RE GONNA GO THROUGH WITH YOU NOW AS TO HOW WE SHOULD GO FORWARD WITH THE PRB AND WHAT OUR RECOMMENDATION
[00:55:01]
IS.UM, AGAIN, THE TASK FORCE STARTED WORKING BACK IN 2020 2 23 AND, AND IT REALLY WAS A COLLABORATIVE APPROACH OF LOOKING, AS I SAID, THE BOARD AND MYSELF STARTED LOOKING AT HOW DO WE SOLVE THIS PROBLEM BACK AS EARLY AS 2017.
AND DURING THAT TIME, WE'VE SPENT A LOT OF TIME TALKING TO PENSION EXPERTS, TO INVESTMENT BANKS, TO DIFFERENT FOUNDATIONS THAT SPECIALIZE IN THAT, PARTICULARLY THE REASONS FOUNDATION IS A VERY, VERY GOOD ORGANIZATION WHO'S VERY INVOLVED IN PENSION FUNDING AND HAS WORKED WITH OTHER UNDERFUNDED PENSION PLANS TO COME UP WITH WAYS TO SOLVE THAT.
AND THE BEST THING IS THEY DO WITH PRO BONO, THEY'RE COVERED BY SOMEBODY ELSE.
SO IT'S CLEARLY A RESOURCE AS THE CITY GOES FORWARD.
THEY NEED TO BE LOOKING TO TAKE ADVANTAGE OF THAT AND GET A LOT OF, A LOT OF GOOD INFORMATION AND A LOT OF RESEARCH ON THAT.
UH, WE'VE ALSO TALKED TO, UH, AND RO ROB HAS BEEN THE, THE LION'S SHARE OF THAT, WORKING WITH THE POLICE AND FIRE ASSOCIATIONS, TALKING TO RETIREES, ET CETERA.
AND WE'VE ALL BEEN WORKING HEAVILY WITH CITY STAFF 'CAUSE WE'RE TRYING TO GET SOMETHING UP.
I MEAN, OUR GOAL HERE IS TO HAVE A PROPOSAL THAT'S ONE CREDIBLE MEETS THE GOALS, BUT ALSO ALIGNED WITH THE CITY AND WITH, UH, DPFP SO THAT IT'S GONNA BE, UH, SOMETHING THAT WE CAN ALL BE PROUD OF.
AND WE'VE DONE AN AWFUL LOT OF WORK ON THAT.
OUR GOALS ON THE NEXT SLIDE, CLEARLY NUMBER ONE IS TO MAKE SURE WE HAVE A CREDITABLE PLAN THAT WE CAN SUBMIT TO DPFP AND AND AND TO THE PRB THAT WILL BE VIEWED AS CREDIBLE AND ACCEPTED, AND TWO NUMBER TO ENSURE THAT THE POLICE AND FIRE PENSION PLAN IS APPROPRIATELY FUNDED SO THAT THOSE OFFICERS WHO ARE SERVING US EVERY DAY FEEL COMFORTABLE THAT THEY WILL HAVE A SECURE PENSION WHEN THEY GET TO THOSE DAYS.
I MEAN, THAT, THAT IS A REALLY AN ULTIMATE GOAL.
WE ALSO ARE TRYING TO WORK TO GIVE THE CITY OPTIONALITY IN FUNDING ITS PENSION OBLIGATIONS.
BUT CLEARLY, UH, WE'VE PROVIDED THE CITY WITH THESE RECOMMENDATIONS, IF ADOPTED, UH, HIGH, HIGHLY MOTIVATED INCENTIVES TO GO AHEAD AND MAKE A SIGNIFICANT CONTRIBUTIONS TO THE PLAN, UH, BETWEEN NOW AND THE NEXT TWO OR THREE YEARS.
I MEAN, THE SOONER THE BETTER, THE SOONER WE START DOING IT, THE SOONER WE'RE GONNA GET THE BENEFIT OF HAVING THE PLAN MORE APPROPRIATELY FUNDED.
I MEAN, IT'S TRYING TO FIND HOW TO GO THROUGH THIS NEEDLE, A NARROW GATE, BASICALLY IS HARD.
BUT I THINK WE'VE GOT A SOLUTION THAT WE ARE GOING TO RECOMMEND AT THIS TIME.