Retirement Committee — Burlington, VT
Date: 2014-09-30
Time: 17:00

DRAFT
 Burlington Retirement Committee
 Meeting of the Committee Members
 Agenda
 September 30, 2014 5:00pm – 7:00pm
 Contois Auditorium, City Hall
 149 Church St., Burlington Vermont 05401


5:00pm – 5:05 pm Approve Agenda

 Jim Strouse moved to approve, Bob Hooper seconded
 Approved unanimously

 Review and Approval of September 2, 2014 meeting minutes
 Councilor Bushor approved; Councilor Mason seconded
 Approved unanimously

5:05pm – 5:10pm Public Comment

 Ron Ruloff

5:10pm – 6:40pm Review of Summary Paper of Retirement Committee Discussions
 All, with Keith Brainard

Bob Rusten: For context on tonight’s discussion, coming out of last meeting a frustration expressed
by some about the extent of progress and a desire to wrap up soon. So, Brian and I drafted a paper
summarizing where we are and outlining several recommendations. Also, the resolution that
created this committee requires a report of some kind, and this could form the basis of that. We’d
like to get some feedback on that draft tonight – starting with broad comments and then turning to
the more specific.

Councilor Bushor: I think the report does encapsulate what the Committee has discussed. I found
the report helpful, and I think it will be a useful document to update the Council with. I also like
that it has put into place helpful suggestions.

Mike Flora: I think it lends good structure to what we’ve done so far. A few things that made me
uncomfortable: We need to clarify who we are talking about – is it new employees, is it active
employees, or retirees. There was mention at the last meeting of retirees. I want to be on record –
again – about not supporting that. People have contacted me with concerns about changes
impacting what they have accrued. There are legal and moral reasons why that cannot be touched.
In particular, there is a consequence of potentially losing people with experience across the City
who are worried about their retirement. The City could lose that experience, and there is also a
substantial cost to recruiting new employees. Lastly, I think it is worth having a public forum as
well to update people on what we’ve done.

Bob Hooper: I think the paper is excellent and gets the issues out on the table – there is nothing
hidden here, and it is important to get everything out early. I think this is a good representation of
what we’ve discussed thus far.

Bob Rusten: Keith, I know that Brian shared this with you. Can you confirm that this is accurate
and consistent with the material you presented?

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Keith Brainard: Yes. It is a good paper that captures accurately the substance of the discussion.
One other thought: An earlier speaker talked about employees wanting to leave in order to avoid
any changes to the retirement system. That is based on a misunderstanding – whatever reform
takes place should encompass people regardless of their status, and made in a conscious way that
does not incentivize employees to leave early.

Mayor Weinberger: Keith’s point is a good one – we do not want to incentivize people to leave
early.

John Federico: At least one of these recommendations may have already done this.

Bob Rusten: I think it’s important to note that some of the beginning concerns people had have not
come through in this process. For example, the Committee did not come to the conclusion that a
transition to a defined contribution (DC) made sense at this time. Other comments about specifics
of the report?

Councilor Paul: I would say on page 3 more clearly, if in fact it is the sense of the Committee, that
based on what we have seen in Burlington and nationally (with DB reform generating greater
savings rather than a transition to a DC), this should be made clearer and perhaps written to clearly
highlight this.

Councilor Bushor: How should we approach our comments in process?

Bob Rusten: I am aware of the resolution that tells us what we need, and appreciate that not
everyone on this Committee is in a position to vote. I think we move from big picture to more
specific and let the discussion evolve.

Councilor Bushor: We need the actuarial information from BERS. And, in the minutes, someone
had cited that many communities referenced in our research are larger than BTV – if we suspended
or reduced COLAs, would that bring the outcome we want? How do we know what the outcome of
these actions would be? I’d want to know that before having to take action on change.

Mayor Weinberger: We need to wrap this Committee’s work up, and we need to understand the
impact of some of the suggestions, and that is the first of the recommendations

Councilor Knodell: Let’s focus on the recommendations – who would COLA impact? It makes a
difference if this were to impact someone who is dependent on the pension, or someone who has
taken another job in addition to this income.

Keith Brainard: In the BERS system, some employees have had a choice whether or not to take a
COLA at retirement – that is unique. So, since some get a COLA & some do not, there is some
inherent unfairness in this approach [suspending or reducing COLAs for a set time or until a certain
plan condition is met]. You could, however, suspend the COLA with a promise that once the plan
reaches a certain funding level, the lost value would be restored. That would address the fairness
question.

Councilor Knodell: Is the COLA change the only thing that touches the unfunded liability?

Mayor Weinberger: Keith’s identification of where our system departs from national norms could
also provide an opportunity to reduce the unfunded liability.



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Karen Paul: Before we turn exclusively to the recommendations, is there common agreement on
pages 2, 3, 4? No significant issues?

John Federico: I have some concerns. Briefly now, though I will need more time with the document
to fashion a fully accurate response, I am curious about how we compared our system to national
figures and how Keith did that. Also, the City has always had the same amount of risk – it just that
the costs associated with that risk have changed. I will try to fashion a written response to share.

Bob Rusten: Any other concerns on sections I or II? John, I should say that I understand your
comment about needing more time, so this is not to lock anything in right now. Any issues with
Section III?

Councilor Bushor: I agree that nothing has changed with respect to the risk the City bears, but it is
worth noting that we have tinkered with the system many times, and we have made the plan richer.
That’s part of the reason why we are where we are today. I heard that over and over again from
people.

Keith Brainard: Point of clarification: A couple things have fundamentally changed about the City’s
plan and the risk the City bears. The plan is more mature, as more people in the plan are retired,
and this increases the burden on the employer. In addition, interest rates were higher ten or 15
years ago – making an 8 percent return at that time was significantly easier. It is harder with
interest rates at 2 – 3 percent (as they are now). This shifts risk to employers and taxpayers.

Mike Flora: There is little mention in this report on the assumed rate of return. We have questions
about a management fee structure, and that needs to be incorporated.

Brian Lowe: Agreed - we are waiting for the information from BERS before drafting the sections on
the actuarial assumptions.

Bob Rusten: Returning to section four then – what other comments do people have, and would
people like to respond to Jane’s point on the recommendations?

Councilor Bushor: We need to know the impact of these proposed solutions.

Mike Flora: And also, we need to know what the endgame is of this – if we get to 85 percent funded,
that would define the structure for us. That’s where I’d like to come to a conclusion. We need to
know what level would be okay with auditors and would not adversely affect the bond rating. We
need to know this to discuss solutions.

Councilor Mason: There isn’t a solution currently proposed in the draft paper that simplifies the
system. I appreciate that is something that would need to be bargained, but I believe it is something
consistent with what the Committee has discussed.

Bob Rusten: Keith, tell me if I am incorrect here. Is it unusual to see more than Class A / Class B
plans? Here we have multiple plans within each Class.

Keith Brainard: That is unusual.

Bob Rusten: So, recognizing this would be discussed within the bargaining process, one way to
address simplicity would be having one plan within Class A and one plan within Class B.

Councilor Bushor: I would like to register support for what Chip proposed and what Keith said.

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Keith Brainard: There are examples of different plans for police and fire, or examples of different
tiers. Fire and police is a relatively common example. If what you want is simplicity, there is
something to be said for striving toward a unified plan.

Bob Rusten: What I am hearing is that we need additional clarity on the financial impact of
proposed solutions, understanding of the impact of COLAs on household incomes, more time to
review, not enough data to support some of the contentions in earlier sessions, level of complexity,
issues related to underperformance of rate of return, target for the unfunded liability, simplifying
plan by having a public safety and a non-public safety plan (understanding there could be
differences between fire and police). So, where do we want to go with this?

Jeffrey Wimette: If we had given all the information to Keith, he could have gotten this months ago.
I think it is getting to be time to end this Committee and figure out what it wants to do. At the end
of the day, we are going to sit down at the bargaining table. If you can’t show someone how this
benefits them, show people how it will benefit the City, then you can’t pass anything. If you can
prove it is better for people, and better for the City, then you can probably pass something.

Bob Rusten: In terms of the report itself, and in with the intention of bringing this to conclusion,
you mean we should move this to the City Council?

Jeffrey Wimette: Those on the Committee that can vote should move this forward. I have given my
input, and will continue to do that, but it’s time to bring this to closure. The basic point is that to
change the system this group will need to show people how it works and betters everyone or this
will not fly.

Councilor Knodell: I realized at the last meeting that some people were not voting members. I
think it’s too bad. If it is not possible to reach consensus, it is time to move this forward. I wish it
would be the whole Committee.

Eileen Blackwood: In response to Jeffrey’s comments: We are going to have to figure out what the
effects of some of these proposals will be. How will it affect people, and what does it mean. I want
to respond to Jeffrey’s underlying point and say yes, I agree with that.

Councilor Bushor: I feel like a flashback to 2007. We have a lot of time on the report, but we need
to have something to show for it. I certainly respect the fact that people will have to negotiate this.
We seemed to have built a good sense of knowledge around the table, and I feel like this is
incomplete and don’t feel a lot of hope in the future.

Jim Strouse: One of the big things that is missing, and that will help us to flesh out this report, is the
input from the BERS Board after we finish our deliberations. We would like to make a decision
about the investment of the funds at our next meeting. We can discuss changes to the actuarial
assumptions, and we plan to bring our decision to this Committee before implementing anything.

Eileen Blackwood: In response to Councilor Bushor’s comments – I’m actually feeling hopeful. The
details about what will occur have to occur in collective bargaining. I am hopeful that the
Committee is setting the foundation for what is to come – with the City staff, for the City Council, for
the unions. There is going to be a lot more to come.

Mike Flora: I want to make sure we are all on board – we had a holistic approach coming into this,
and I don’t want that to fracture. The non-union folks aren’t at the bargaining table. I think it is
productive to work together.

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Councilor Paul: I was on the 2007 Committee as a citizen. Ultimately, that process was in some
ways a waste of time. The unions were not even asked to be at the table. Here, they have been
involved, actively participating, and that is good. I also feel like the 2007 report was written before
the Committee had even met. I think that 2007 report was lacking in many respects – it wasn’t a
collaborative process. Only after becoming a City Councilor did I realize how non-collaborative the
2007 report was. I think, however, that the summary paper written here though is different – it is
something that could be useful in bargaining discussions and it does reflect our discussion.

Bob Rusten: I don’t believe this report could have been written six months ago, and I don’t believe
it would have been trusted had it been written six months ago. We are in this together – we have to
figure out how we do it, but we are in it together. For those who have said from the beginning that
they would not vote, but I hope they will feel able to contribute comments to strengthen the paper.

John Federico: The discussion is about breaking promises, and it that makes it hard to build up
trust. I’ve been involved in a number of processes designed to make positive changes, and some of
that is misrepresented in this report.

Public Comment by Gene Bergman: I appreciate the desire to move forward and move forward
quickly. As an employee, I don’t think you’ve done me a service if you put this out tonight. The
detail about contribution rates, for example, is in here, but there’s a lot that isn’t. Also, it is not clear
to me how what I have earned is effected by this report. I would consider those promises to be
broken, not changed. I think you’re closer than you were, and would encourage you to not make
hasty decisions as you continue to work on this.

Joe Keenan. I have three points to make. First, very clear we have two tracks – (i) what we have
done with Keith about system design, and (ii) what is the primary track to my mind - the functional
changes BERS can make to the actuarial assumptions underlying system itself. Those actuarial
changes could have significant impacts. Once we have those changes and how they impact the
system, we know where we really are. Getting back to what Mike Flora said, it has not been defined
what makes the system healthy. That needs to happen. Second, the resolution that came out
reflects reality – I can’t vote. I have 72 members and I can’t vote on their behalf on this Committee.
I respect the fact that the Mayor and Brian have brought us in to this process. We want to come out
of that with facts and findings – what we do based on that comes later. Third, I negotiate for my
members. I don’t negotiate for retirees. I am really uncomfortable with that. The COLA changes
proposed by Keith would help the system, but on the backs of about 45 percent of the retirees.
Would those benefits would be restored? Maybe. Would everything lost be paid back? Maybe. It
will be lost if people die, though, and payback isn’t certain.

Mayor Weinberger: I do not think it makes sense for tonight to be the final meeting. People would
like more time with the paper, and this is an opportunity to solicit more feedback for two weeks
from now; something that people feel comfortable putting their names on - other than the union
reps who have said they cannot. Like Eileen, I am also feeling a bit more optimistic. One thing for
me that I think makes this feel like a successful process is the evolution in my thinking. There are
examples in the country of systems that have instituted automatic adjustments should the system
deteriorate – the COLA is an example of such a tool by which you eliminate the need for future
negotiations through automatic adjustments.

Relatedly, Keith, we have spoken a bit about this, but in response to Mike’s question, do you feel
comfortable defining a threshold for a healthy system?



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Keith: 80 percent is a somewhat arbitrary but recognized benchmark of system health. Ultimately
it is a stable contribution rate that indicates system health, but 80 percent funded is a generally
accepted indicator of health.

Mayor Weinberger: This summary paper to me is not a laundry list of possible solutions – it is a
tight and focused list that we need to score [the impacts of the proposed solutions on the system].
The process has changed my view of what a successful system could be, has given us specific follow
up tasks, and is something we can accomplish together.

Bob Hooper: We need to come to clarity on agreement among the parties here about what is best
for the employees and the plans.

Bob Rusten: Here are the five areas we keep coming back to:

 1. Who will be impacted?
 2. What about benefits already accrued?
 3. How to measure success?
 4. How to measure impact?
 5. COLAs?

Bob Rusten, continuing: The Mayor has suggested, and in some ways I think others have as well, we
need to address these questions. We have not had lots of time to look at the report. Do we want to
take more time to come back together one last time to give final input and to also see what the BERS
suggestions are? And through that process, address some of the areas that are unresolved?

Councilor Bushor: I am frustrated because I don’t have answers. Bob, what you recapped is
accurate. If you increase contributions and change the multiplier for Class B – what happens to the
employee, to the employer, to the taxpayer?

Bob Rusten: If there is interest in the Committee in examining the impact of some of these changes
would be, we can have an actuary run the numbers.

Councilor Bushor: I am definitely interested in the recommendation listed as #8 on p. 6. I am
interested in learning more about the COLA issue.

Bob Rusten: Keith, any additional suggestions on how to move forward?

Keith Brainard: My sense is that the process has become more political. I have tried to present
facts of what other states and cities have done. At this point, the five points you (Bob) laid out are
seminal. From my standpoint, the City has to make some changes. I am willing to bet, though I do
not have any insider information, that after looking at your system, the actuary will recommend a
lower investment return expectation…That will increase the cost of the plan, perhaps by a lot. I
understand how much work has gone into this, and I am hopeful that something can be done to
keep the system sustainable.

Bob Hooper: Keith, is it your sense that given the unique nature of BERS that the COLA is the way to
impact the unfunded liability?

Keith Brainard: Yes.




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Bob Rusten: So, meet again in two weeks?

Karen Paul: Yes.

Others: Yes.

Jane Knodell: What would the decision process be in two weeks? My observation of this group
process is that we were working toward consensus and everyone was an equal participant. I
understand not everyone will be voting. So (following short discussion with Bob Hooper), as the
decision process, I’d recommend trying to reach consensus of everyone at the table and that if that
fails the voting members can vote.

Bob Rusten: So the idea in two weeks’ time is to frame this report in a way there is consensus?

Jim Strouse: I think this Committee will want to hear the report of BERS. I plan to have come to
decisions on certain issues, but not to implement anything until after meeting with this Committee.
BERS will be meeting on 10/2 and 10/16 – I think this Committee should meet again, and should
meet in three weeks so BERS can report.

Bob Rusten: What do people think about having that last meeting on 10/21?

Councilor Knodell: If we commit to 10/21, we need to absorb the information and be prepared to
make a decision.

Mayor Weinberger: Bob and Brian would need to have a draft with the actuarial assumption
sections filled in. This would need to be distributed ahead of time. If people have reactions to the
draft, they could email to Brian or Bob and the draft could be updated well in advance of the
meeting.

Bob Rusten: If people have other reactions to the draft, they need to get it to Brian and I within a
week or so.

Mayor Weinberger: I am interested to hear what John says as well. Sections I, II, and III will
become the basis for the negotiating position for the City – if what is in here is flawed, this is an
opportunity for people to correct that.

Jeffrey Wimette: This has been a good process. These conversations have been shared with
members. This summary will be brought into negotiations. I represent the members at BED. I also
represent to some degree the City of Burlington. I know what you are talking about and what you
are trying to accomplish. Everyone at this table knows what you are trying to accomplish. And, that
information is going to go into the negotiations for Fire, Police, AFSCME, and others. Be clear about
what you want to accomplish. It is beneficial for me to be here even if I don’t vote, because I still
have to deal with Eileen and Bob in bargaining whether I vote on this Committee or not.

Bob Rusten: One last point: If we try to address the five questions I laid out (above) at the meeting,
it won’t work. I think we need to have a sub-group come together representing a range of
viewpoints – Mike Flora, Joe Keenan, Brian Lowe, Bob Rusten, Jim Strouse. Anyone else who should
be in that group? (no disagreement). Brian and I will deal with the logistics and be in touch. And
the meeting on the 21st will hopefully be the last meeting, with the goal of reaching consensus
without putting people in a position they are uncomfortable with.


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Mike Flora: Is our little sub-committee tasked with thinking through what the deliverable is for the
last meeting? And what that last meeting is going to look like in terms of process?

Bob Rusten: It will probably be organic, and dependent on what people provide in terms of
comments and the report. Is there anything else we’d like to ask Keith to do between now and
10/21?

Councilor Paul: Could Keith explain where the national norm data comes from, that would be
helpful.

Bob Rusten: And specifically, what the national norm is so people know. Do people think having
Keith available makes sense? (yes)

Keith Brainard: I am willing and able to call on 10/21.

Bob Rusten: Thank you. See you all on 10/21



Next Meeting Time: October 21, 5 – 7pm, Location TBD




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