HomeMy WebLinkAboutFCMeetingMinutes_11.17.15
TOWN OF NORTH ANDOVER
FINANCE COMMITTEE
Meeting Minutes
Meeting Date November 17, 2015
Meeting Location: School Administration Building
CTO 6:45
Bill Callahan, BC Chairman X Susan Almono, SA
Donald Elliot, DE Vice Chair X Timothy Tschirhart, TT X
Karin Blake, KB Liz Gerron, LG X
Thomas Ringler, TR X Angela Ciofolo, AC, X
Chris Nobile, CN X
Jennifer Goldman, JG X
Non Fincom Members in Attendance
Andrew Maylor (AM), Town Manager
Note: All FINCOM votes are subject to change upon receipt of new information.
Note: Documents used in this meeting are listed in Document Table, herein.
Agenda A. Approval of Minutes
BC: Asked the board to review minutes for any changes, additions or deletions
JG: said that there was something she had asked to TT on the increase of taxes that was missing.
th
DE: made motion to adopt and accept the minutes as amended for October 28
LG: second the motion
JG: read the amended minutes to be entered
Amending the line on page 4 from the October 28th minutes, JG: asked if there has been an
increase in taxes, which should read;
JG , asked what the average increase in taxes per year is.
TT: responded 1.75% to 2.5%
JG: responded that seems to be below the average rate of inflation.
All were in favor to adopt the minutes as amended.
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November 17, 2015
Agenda B. Andrew Maylor FY17 Planning Retirement Assessment
BC: Introduced Andrew Maylor to speak on the Essex County Retirement System. We are
thankful AM was able to make himself available to speak to us on this.
AM: I will give an overview in about 30 minutes, there is a lot of information, and I am sure you
will have questions.
AM: stated just to understand my background I was a chairman for 3 different retirement
systems out of 105 that exist in Massachusetts. I was Chairman of the Winthrop and Chelsea
Retirement Systems and then the Essex Regional Retirement System. In the year 2010 I was
appointed by the State to fix some issues with the Essex Regional Retirement System.
I got off the Board when I accepted the position of Town Manager here in North Andover.
AM: I do not own the rights to the retirement System, but I do have some perspective on how
things have changed and how they have improved.
AM: Retirement systems are governed under MGL Chapter 32.
The retirement systems can hold one of 3 forms
-Local retirement (examples is Andover and Swampscott)
-Regional, Essex Regional Retirement System (covers variety of governmental units)
- State is the largest (Mass Teachers)
AM: Spoke of Public Employment Retirement Administration Commission also known as
PERAC.
They are members that have the responsibility to serve as an oversight body, they are a resource,
and they help interpret the law and review applications for retirement.
AM: Spoke of the Essex Regional Retirement System (ERRS), A Special Legislation in 2010
was formed to address concerns and irregularities.
PERAC conducted an audit and found that there were about 2 dozen irregularities that were
identified and that helped determine that the ERRS needed oversight.
AM: There are 47 entities that comprise the ERRS, 19 Towns (with North Andover being the
largest), 17 Housing Authorities, 5 Regional Schools and 6 Special Districts.
AM: then spoke of the amount of Active, Retired, and Future Retired Members.
AM: This is a 5 Member Board of Directors (Fiduciary Responsibilities), 2 elected retirees, 1
Chief Executive, 1 Treasurer (advisory Committee) and 1 member selected by the other 4.
AM: stated that they operate a little different than us, they are in FY16 and go by Calendar Year
Cycle.
The operating cost is approximately $1.3 million.
AM: The majorities of the investments are with the Pension Reserves Investment Trust (PRIT)
and are managed by Pension Reserve Investment Management Board (PRIM).
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November 17, 2015
AM: spoke of the history of issues and mismanagement in the past and how ultimately with new
members and the change in leadership, transparency on the website, reports, names of directors,
and scheduled meetings this has all lead to a positive transformation.
AM: spoke of the employees who are eligible for Retirement Benefits. Employees, who are
permanent employees, and work 20 hours or more, and have $5,000 or more for a yearly salary,
Massachusetts public employees are exempt from Social Security. Therefore this system works
in lieu of that. All employees who meet this employee eligibility must participate. This is not
optional.
If an employee works less than 20 hours they do not qualify, they withhold OBRA.
For elected officials OBRA is optional.
AM: spoke of 3 primary ways to receive Benefits,
Superannuation (traditional retirement), the amount of years and age will drive what you will
receive. Max is 80%.
Retirement eligibility,
-20 years of service and any age
-10 years of service and 55 of age plus
-Maximum 80% of 3 highest years (new employees highest 5 years)
Disability
-Ordinary no longer capable to do your specific job that is 50%
-Accidental injury while at work and cannot perform essential job 72%
Vesting -10 years of service
AM: Once an employee is retired they are eligible for a cost of living increase, but it will never
exceed 3% (cost of living only on the first $13,000).
AM: All employees contribute a percentage and it varies depending on when they were hired.
Any dollar amount above $30,000 has an additional withholding of 2%.
In a 2011 reform they established a new contribution of 6% after 30 years for those hired after.
You cannot alter the benefits of an employeecontract after they are hired.
The appropriation for FY17 is $4,409,000. It increases about 7% a year expected through 2021.
This is about $320,000 to $340,000.
AM: Contribution levels increase as payrolls increase.
AM: told the Board that he submitted and provided to the Board the Actuarial Valuation Report
dated January 1, 2014 of the Essex Regional Retirement Board. This study provides details and
studies of the Essex Regional Retirement Board.
AM: we represent about 14.87% of all of the payrolls, within the systems of the Essex Regional
Retirement System.
AM: The goal is to be fully funded by 2035.
AM: This is a quick over view of the retirement system.
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November 17, 2015
BC: Asked if AM could explain the funding schedule in the report he provided (columns going
left to right)
AM: Stated that not all the columns are relevant but he talked about the Normal Cost that funds
and pays bills. Next column is considered the liabilities for future cost.
JG: What is the balance set aside today for 2015-2016
AM: responded that the Asset Value of the system is $344,991,750, but it can go up and down
based on what happens in the market.
AM: Continued with explaining the Funding Schedule Columns. The next column Funding
Amortization is the current year cost that we have to pay in, and for us that is 14.87%.
AM: Commented on how retirement systems get to decide on what they feel is reasonable on
investing the market returns; should they spread it out or should they shorten the schedule on
their liability. But they do this within some constraints on what PERAC seems as reasonable.
DE: Asked do they move it to more conservative investments.
AM: Responded they literally alter the schedule.
JG: If there is a shortfall, what responsibility does the town have in order to cover?
AM: there is no shortfall, every 2 years we recalibrate this report, based on actual data, Specific
to our town. It is driven by an actuarial study.
TR: Asked what if a town involved could not pay, what would happen?
AM: Responded they would have to be removed from the system.
CN: Commented that the message really is that in the years that have been planned, we follow it,
we watch it, it is impactful, but there is nothing that we can do. We are all in the same water as
everyone else at the same time.
AM: Stated that there are 2 groups of employees, Municipal and School Employees. The
Teachers are funded entirely by the Commonwealth (Massachusetts Teachers Retirement
System).
AM: Asked if there were any other questions
Finance Committee Members Thanked Andrew Maylor
BC: Thank you Andrew. That was our major agenda item for tonight, this was to get an update
information on the Pension System, and it was very informative.
Agenda C. Adjournment
8:05
DE: Made a motion to adjourn
CN: Second the motion
All in favor
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November 17, 2015
Document Table
SUBJECT FROM TO
1.Finance Committee Minutes October 28 th,2015 Angela Fincom
2.FY 17 Operating Budget Policy Statement Town Manager Fincom
3.Essex Regional Retirement System Town Manager Fincom
(ESSR Actuarial Valuation Report)
4.Massachusetts Public Retirement Systems Town Manager Fincom
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November 17, 2015