Department of Retirement System (DRS) Director Sandy Matheson called the meeting to order at 10:00 am. Workgroup members present were:
| WACOPS | LEOFF 1 Coalition | RFFOW | WSCFF |
|---|---|---|---|
| Ken Crowder | Mark Curtis | Randy Plain | Keven Rojecki |
| Dan Downs | Dick Warbrouck | ||
| Retired Seattle Police Association (RSPA) | |||
| Gerald Taylor | |||
| Attorney | Assoc. of Counties | Assoc. of Cities | WA. Fire Commissioners |
| Joe Fischnaller | Brad Banks | Jim Justin | Roger Ferris |
Director Matheson welcomed everyone to the meeting and invited the attendees to introduce themselves and the groups they were representing. After introductions the Director provided a brief overview of prior LEOFF Plan 1 medical studies and discussed the report she developed and submitted to the Governor in 2007. The Director indicated that she had been tasked by the Governor’s office and the Office of Financial Management to determine how to follow-up on the 2007 study.
Medical benefits for LEOFF Plan 1 have been a significant source of controversy and debate over the last several years. The presumption is there is a shortfall of funding for these benefits. Because of the complexity of pension issues and law, frequent misunderstanding of the complex factors, differing assumptions of fact, and a resulting level of distrust among key stakeholders, the Director decided to engage key stakeholders in a follow-up study. This meeting is the first in the follow-up study.
Director Matheson provided an outline for workgroup’s products and asked for comments on the following:
The purpose of this phase is to create a common understanding of and set of information about the LEOFF Plan 1 medical liability. Further, the purpose of this phase is to allow stakeholders to determine if a problem actually exists, and then if they want to work on it jointly or if they wish to separately pursue their solutions with the legislature or other authoritative bodies. Director Matheson stated she will not allow discussions of solutions in this phase as they are premature before all the facts are gathered and considered, and that could easily lead to further mistrust and complication of an already difficult situation. She indicated the most harmful activity we collectively can do to members of this plan is to spread inaccurate information or create false perceptions.
Workgroup members will determine the facts that need to be gathered and questions that need to be answered to create a commonly acceptable fact book. In order to gain credibility for the workgroup by members and other stakeholders, DRS will independently gather all information based on the workgroup’s direction, present it to the workgroup for discussion, and then modify the information as appropriate. The goal is to create factual information that is acknowledged by all members as accurate.
The Director indicated that her goal for the meeting was to get agreement that this is the approach, including the goals and steps that should be undertaken. She opened the meeting up for discussion of the approach.
The first comment was whether this approach exceeded the study that was originally included in the Substitute House Bill (SHB) 2688. The Director discussed the Governor’s veto of the study proposed in Section 2 of SHB 2688. She assured the workgroup that the approach aligned with the veto message and reaffirmed that she had been given authority to present the approach as a follow-up to her 2007 study report. Read veto message. (Please see the reference to a broader range of possibilities.) Further, the follow-up actions to the 2007 study were left up to the discretion of the Director.
Workgroup members suggested that the ultimate goal for this effort can be generally stated as identifying funding sources to assist local government employers with addressing the LEOFF Plan 1 medical liability. To meet this goal the group will need a better understanding of the individual impact to each employer and an understanding of what funding options, for example, current taxation authorities, might be available to raise revenues to fund the liability. It is possible that the problem is not universal for all local government and that all the issues have yet to be fully understood. It was noted that in publishing GASB 45 medical liability, there was no discussion of what revenues may be available to address the liability. In collecting the factual information, a corresponding revenue stream that could balance the liability may become visible.
There was discussion about whether the work would focus only on funding or would include some of the items included in the Director’s 2007 study. The Director stated that all issues must be identified and the facts presented for common understanding. If only the funding is looked at, there will be a rush to solutions without having addressed and put to rest other related or underlying issues.
There was general consensus that a comprehensive set of facts must be understood and agreed to in order to understand all aspects of the potential problem. The facts would also create an even playing field for all stakeholders. There was also discussion about the structure or steps in Phase 2 which will be addressed only if the group decides to initiate Phase 2. At the end of the discussion Director Matheson asked again whether the workgroup was comfortable with the approach of a) fact finding and then moving onto b) solutions for funding. The group acknowledged that the approach was appropriate with no one dissenting.
There was a question about when the work of the group would be completed. Director Matheson indicated that she would like to have all fact finding completed before the start of the 2009 Legislative session. At that point the workgroup could decide whether it was feasible to move to the next phase of identifying solutions. The group asked if information on local government taxing authority would be included in the facts. This data will be included in the fact finding. The group agreed that all questions and data should be presented with a balanced approach so as to not raise undue concerns over the goals of the workgroup.
Participants concurred that under the two phase approach, the composition of the workgroup for Phase 1 will include all attendees at the May 22, 2008 meeting, Bill Kantor, and a representative finance manager or support person from the cities, counties and fire districts. The Director will contact Bill Hanson to see if he or someone representing the Washington Fraternal Order of Police would like to participate in the workgroup.
Director Matheson stated that the conduct of group participants will dictate the credibility and success of this effort. DRS commits to facilitating the meetings, to providing factual answers and professional references to questions to the best of its ability to the group for discussion and input, and to its employees conducting themselves in a manner that is unbiased, from both an actual and a perceived perspective. Further, DRS commits to providing minutes from each meeting as soon as possible, and to posting information on its website that the group has determined to be factually accurate.
Director Matheson stated rules of conduct DRS needs from participants in order to create a successful Phase 1 outcome. She requested that workgroup participants review the minutes provided by DRS, provide necessary corrections, if any, and post only those minutes on their organizational websites to ensure consistency across the LEOFF Plan 1 membership. Contributing comments to the group’s product and publishing one consistent work product will provide members with accurate information and help develop confidence among Plan 1 members. Director Matheson reiterated that she will entertain all questions with a goal of a uniformly acceptable set of facts as the end product of Phase 1. Workgroup participants concurred with no dissensions.
The workgroup identified the first set of facts to be developed. The Director will prioritize the items that will be presented at the next meeting. It was agreed that the information will be provided to workgroup members before the meeting but that, until there is agreement on the facts, the information should not be disseminated outside of workgroup members. The following questions are presented in the order that they were raised.
Identify employers who still have active or retired LEOFF Plan 1 members.
Identify employers who still have active or retired pre-LEOFF members.
How have other states addressed paying for mandated medical costs? This question will be put on hold until the workgroup gets to Part 2: Solutions.
What taxing authority exists for cities, counties and fire districts?
Do employers have a contractual obligation to provide the medical benefits to LEOFF Plan 1 members as provided in RCW 41.26.150?
What is the total value of the LEOFF Plan 1 assets being held for the benefit of members, retirees and survivors? This question will be addressed with an education session on funding, investing and the purpose and scope of the valuation reports produced by the Office of the State Actuary and annual financial reports produced by DRS.
Is LEOFF Plan 1 a defined benefit plan?
Is there a surplus of assets in the LEOFF Plan 1 fund? If so, who “owns” the assets?
How does the Pension Protection Act of 2006 affect the ability to use excess pension assets to pay for medical costs? This question is formula driven. Any discussion as to the use of excess assets will be deferred to Phase 2 if it is initiated.
The workgroup agreed to go through the questions included in the Director’s 2007 report at the next meeting to identify any items that should be included in the fact finding. There was a discussion about including other individuals in future meetings.
The next meeting is scheduled for June 12th at 11:00 a.m. in the President’s Boardroom at North Seattle Community College. A contact list of workgroup participants will be sent out. The workgroup agreed to refer all press inquiries to Director Matheson. With no further business, the meeting adjourned at 12:30 p.m.