Police Officers' and Firefighters' Pension Reform Commission (09/14/2009)

Final
STAFF SUMMARY OF MEETING

POLICE OFFICERS' AND FIREFIGHTERS' PENSION REFORM COMMISSION

Date:	09/14/2009	ATTENDANCE

Time:	09:05 AM to 10:42 AM	Casso	E
		Gardner B.	E
Place:	HCR 0112	Harvey	E
		King S.	X
This Meeting was called to order by		Labuda	X
	Representative Benefield	Liston	X
		Lundberg	X
This Report was prepared by		Peniston	X
	Geoff Johnson	Riesberg	E
		Schafer S.	E
		Tochtrop	X
		Waller	X
		Williams	X
		Morse	X
		Benefield	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Bill 1 Bill 2 Bill 3 Bill 4 Public Testimony Bill 5		Recommended for Introduction Recommended for Introduction Recommended for Introduction Recommended for Introduction - Recommended for Introduction

09:06 AM

Representative Benefield, Chair, called the meeting to order.

09:06 AM -- Bill 1

Kevin Lindahl, General Counsel, Colorado Fire and Police Pension Commission (FPPA), presented legislation recommended by the FPPA Board of Directors. He said that the board is proposing four bills to the commission this year. He began by presenting Bill 1 (Attachment A), concerning elimination of the local money purchase plan affiliation. He said that the bill will eliminate the ability of local money purchase plans to affiliate with the FPPA for investment services and plan administration. He noted that there are no such money purchase plans affiliated with the FPPA at present. He said that most of the local plans that left the FPPA system in earlier decades to create money purchase plans have since re-entered the FPPA defined benefit system. He said that Bill 1 will "clean up" unnecessary language in, and simplify, the FPPA statutes.


BILL:	Bill 1
TIME:	09:12:50 AM
MOVED:	Tochtrop
MOTION:	Moved that Bill 1 be recommended for introduction during the 2010 legislative session. The motion passed without objection.
SECONDED:
		VOTE
	Casso	Excused
	Gardner B.	Excused
	Harvey	Excused
	King S.	Yes
	Labuda	Yes
	Liston	Yes
	Lundberg	Excused
	Peniston	Excused
	Riesberg	Excused
	Schafer S.	Excused
	Tochtrop	Yes
	Waller	Yes
	Williams	Yes
	Morse	Yes
	Benefield	Yes

Final YES: 8 NO: 0 EXC: 7 ABS: 0 FINAL ACTION: Pass Without Objection

09:13 AM

Representative Benefield said that Bill 1 will be introduced in the Senate and will be sponsored by Senator Tochtrop and Representative Labuda. All members present will serve as co-sponsors on the bill.

09:14 AM -- Bill 2

Kevin Lindahl, General Counsel, FPPA, described the provisions of proposed Bill 2 (Attachment B) concerning FPPA retired board member term extension. He said that the bill will extend the term of the retired firefighter or police officer serving as a member of the FPPA Board of Directors from a four-year term to a six-year term. He noted that the Board of Directors believes that an extended term for the rotating membership will be valuable to the FPPA because of the learning curve required for board participation. He added that the Board of Directors is currently composed of nine members, and said that new members of the board typically spend approximately two years of the term just "getting up to speed." The bill will give the person serving to represent retired police officers and firefighters more time to become valuable board members.


BILL:	Bill 2
TIME:	09:19:56 AM
MOVED:	Morse
MOTION:	Moved that Bill 2 be recommended for introduction. The motion passed without objection.
SECONDED:
		VOTE
	Casso	Excused
	Gardner B.	Excused
	Harvey	Excused
	King S.	Yes
	Labuda	Yes
	Liston	Yes
	Lundberg	Excused
	Peniston	Excused
	Riesberg	Excused
	Schafer S.	Excused
	Tochtrop	Yes
	Waller	Yes
	Williams	Yes
	Morse	Yes
	Benefield	Yes

Final YES: 8 NO: 0 EXC: 7 ABS: 0 FINAL ACTION: Pass Without Objection

09:19 AM

Representative Benefield said that Bill 2 will be introduced in the House of Representatives and that Representative Waller and Senator Tochtrop will serve as prime sponsors of the bill. She said that all members present will serve as co-sponsors of the bill.

09:20 AM -- Bill 3

Kevin Lindahl, General Counsel, FPPA, presented Bill 3 (Attachment C), concerning the return to work of FPPA members participating in the FPPA defined benefit system. He said that the bill will authorize the FPPA Board of Directors to adopt rules to suspend the pension benefits of a member who participates in the defined benefit system, separates from service, elects a retirement, and subsequently returns to work with a defined benefit system employer. The bill will allow the board to adopt rules allowing a member who has reached normal retirement age, separated from service, elected a retirement benefit under the defined benefit system, and subsequently returns to work to continue receiving a distribution of benefits and earn additional retirement benefits in an alternative money purchase plan. Mr. Lindahl noted that the board typically adopts rules on an annual basis. He commented on the board's rule-making process. He commented on options that will be available to members under the proposed legislation. Representative Labuda expressed concern with the potential for "double-dipping" under the bill. Mr. Lindahl commented on the situations of FPPA retirees who would be affected by the bill. He noted that the bill addresses persons who have met the qualifications for an FPPA retirement benefit and later choose to re-enter the work force. He said that the board does not recognize this situation as "double-dipping."


BILL:	Bill 3
TIME:	09:35:37 AM
MOVED:	Morse
MOTION:	Moved that Bill 3 be recommended for introduction. The motion passed without objection.
SECONDED:
		VOTE
	Casso	Excused
	Gardner B.	Excused
	Harvey	Excused
	King S.	Yes
	Labuda	Yes
	Liston	Yes
	Lundberg	Excused
	Peniston	Excused
	Riesberg	Excused
	Schafer S.	Excused
	Tochtrop	Yes
	Waller	Yes
	Williams	Yes
	Morse	Yes
	Benefield	Yes

Final YES: 8 NO: 0 EXC: 7 ABS: 0 FINAL ACTION: Pass Without Objection

09:36 AM

Representative Benefield said that Bill 3 will be introduced in the Senate and that Senator Williams will serve as the primary sponsor in the Senate. She said that Representatives Reiesberg and Liston will serve as co-prime sponsors in the House, and that all members present will serve as co-sponsors for Bill 3.

09:36 AM -- Bill 4

Kevin Lindahl, General Counsel, FPPA, presented Bill 4 (Attachment D), concerning authority for an election of active FPPA members to approve an increase in the member contribution rate. He said that the bill will authorize the FPPA Board of Directors to hold an election to approve an increase in the member contribution rate in the FPPA Statewide Defined Benefit Plan. He noted that such an increase would have no effect on the employer contribution rate and that the increase in the employee contribution rate would not be subject to negotiation for payment by the FPPA employer. Mr. Lindahl noted that the process for approval of the contribution rate increase would follow the FPPA's existing procedure for approval of plan amendments entailing approval of the proposal by both the employer and employees. He said that the process will give FPPA members an alternative to the reduction of benefits in the future in the event that a benefit reduction is necessitated by a funding shortfall. In this event, future FPPA members would be able to choose an increase in contributions as opposed to, for example, an increase in retirement age. He said that there is no immediate need to increase contribution rates. He said that the bill will give FPPA members a mechanism for increasing contributions if it becomes necessary.

Mr. Lindahl said that the bill will allow the possibility of the funding of future cost-of-living adjustments (COLAs) and noted that these COLAs are awarded annually on an ad hoc basis by the board. He said that the funding source for future COLAs has fallen dramatically over the previous year. He said that the bill does not require an election, but merely authorizes the board to initiate an election at its discretion. He noted that only active members will be eligible to vote in the elections. Mr. Lindahl commented on fire and police plans in Colorado that are not members of the FPPA. He noted that a number of local plans left the FPPA in the 1980s and that since then 16 have re-entered the FPPA plan.


BILL:	Bill 4
TIME:	10:02:01 AM
MOVED:	Morse
MOTION:	Moved that Bill 4 be recommended for introduction. The motion passed without objection.
SECONDED:
		VOTE
	Casso	Excused
	Gardner B.	Excused
	Harvey	Excused
	King S.	Yes
	Labuda	Yes
	Liston	Yes
	Lundberg	Yes
	Peniston	Excused
	Riesberg	Excused
	Schafer S.	Excused
	Tochtrop	Yes
	Waller	Yes
	Williams	Yes
	Morse	Yes
	Benefield	Yes

Final YES: 9 NO: 0 EXC: 6 ABS: 0 FINAL ACTION: Pass Without Objection

10:03 AM

Representative Benefield said that Bill 4 will be introduced in the Senate and that Senator Morse will serve as the primary sponsor in the Senate. She said that Representatives Riesberg and King will serve as co-prime sponsors in the House of Representatives, and that all members present will serve as co-sponsors of the bill.

10:03 AM -- Public Testimony

Kevin Bommer, representing the Colorado Municipal League (CML), said that the CML is likely to support or be neutral on the four bills that have been recommended by the commission. He said that it is appropriate that the FPPA have the level of scrutiny that the commission provides. He said that FPPA trust funds are 100% funded on an actuarial basis in spite of recent market downturns. He added that the admirable performance of the FPPA is due in part to "safety valves" that have been built into the FPPA plan.

10:10 AM

Dino Ross, representing the law firm Ireland Stapleton, said that he is present on behalf of his law firm and not on behalf of a client. He said that a significant portion of his law practice is representation of volunteer fire departments, and that his comments will address the Colorado Volunteer Firefighter Pension Fund Act. He distributed a handout to the members of the commission (Attachment E). He said that he is recommending several technical changes to Colorado statutes addressing the volunteer firefighter plans.

He commented on a proposal to amend Section 31-30-1102 (9)(b), C.R.S., relating to the definition of the term "compensation" to include salary lost as a consequence of actual firefighting duties causing the absence of the volunteer firefighter from normal employment. He commented on a federal ruling regarding such compensation. He spoke further in regard to the importance of the state's compliance with the federal Fair Labor Standards Act and noted that attorneys fees are awarded under the act. He described four proposed statutory changes proposed to the commission. He commented on a proposal to amend Section 31-30-1105 (1) (c), C.R.S., addressing provisions of the Special District Act that result in vacant seats on fire protection district boards. Mr. Ross commented on a proposal to amend Section 31-30-1119, C.R.S. that mandates that a biannual report from pension boards to municipal governing bodies or fire protection district boards of directors. He said that most pension boards are unaware of this statutory requirement, and that the reports are unnecessary.

Finally, Mr. Ross commented on a proposed amendment to Section 31-30-1113, C.R.S. He said that under the Volunteer Firefighter Pension Act pension funds that are not covered by the FPPA are self-directed. He noted that the statutes allow the treasurer of the fire district or municipality to work with a qualified financial institution to handle the investments of these pension funds. He pointed out that current law requires that these investments be made in conformance with requirements of prudent investor statutes, but also imposes further requirements relating to holding fixed income investments in a portion of the portfolio. He said that these additional statutory requirements are superfluous, impose vague requirements regarding pension fund investments, and should be repealed.

10:32 AM

The commission members discussed the idea of moving forward with commission legislation incorporating Mr. Ross's proposed statutory changes. Senator Morse said that he would be willing to be the prime sponsor of such a bill.

10:41 AM

The committee meeting adjourned.

10:40 AM -- Bill 5


BILL:	Bill 5
TIME:	10:41:00 AM
MOVED:	Morse
MOTION:	Moved that proposed statutory changes listed in Attachment E be recommended for introduction as commission Bill 5. The motion passed on a 10-0-5 roll call vote.
SECONDED:
		VOTE
	Casso	Excused
	Gardner B.	Excused
	Harvey	Excused
	King S.	Yes
	Labuda	Yes
	Liston	Yes
	Lundberg	Yes
	Peniston	Yes
	Riesberg	Excused
	Schafer S.	Excused
	Tochtrop	Yes
	Waller	Yes
	Williams	Yes
	Morse	Yes
	Benefield	Yes

Final YES: 10 NO: 0 EXC: 5 ABS: 0 FINAL ACTION: PASS

10:41 AM

Representative Benefield said that Bill 5 will be introduced in the Senate and that Senator Morse will serve as prime sponsor. She said that Representative Labuda will serve as prime sponsor of the bill in the House and that all members present will serve as co-sponsors of Bill 5.

10:42 AM

The commission meeting adjourned.