Date: 09/30/2013
Final
FPPA Update
POLICE OFFICERS' AND FIREFIGHTERS' PENSION REFORM COMMISSION
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Senator Tochtrop presided over the committee in the absence of Representative Labuda (chair) and Senator Morse (vice-chair).
01:35 PM -- FPPA Update
01:35 PM -- Dan Slack, Chief Executive Officer of the Fire and Police Pension Association (FPPA), introduced himself to the commission and discussed the background of the FPPA. He provided an overview of the Comprehensive Annual Report for the fiscal year ended December 31, 2012, and the Annual Update, dated September 30, 2013 (Attachment A and B). Specifically, Mr. Slack highlighted the Fire and Police Pension Association Board of Directors and administration. He discussed the Statewide Defined Benefit Plan discussed on pages 5 through 7 of the Annual Update. Mr. Slack discussed and summarized the various plans and assets administered under the FPPA, specifically the state-assisted old hire fire and police pension plans.
Attachment A.pdf 
Attachment B.pdf
01:47 PM
Mr. Slack discussed the actuarial studies described on page 12 of the Annual Update, specifically addressing the Statewide Hybrid Plan, the Statewide Defined Benefit Plan, and the Statewide Death and Disability Plan.
Mr. Slack discussed the pension plan member task force, created by the FPPA in 2011, that recommended the FPPA hold an election to increase contributions from individual members. The election will not affect employer contributions. The FPPA board accepted the recommendation to hold an election and passed a resolution to increase contributions by 0.5 percent each year for eight consecutive years, with a cumulative increase of 4.0 percent. The election will be held in April 2014 and requires the approval of 65 percent of pension enrollees. A majority of employers must also approve the plan. Mr. Slack answered questions from the commission regarding alternatives if the contribution increase is rejected.
02:00 PM -- Kevin Lindahl, FPPA General Counsel, answered questions from the committee regarding the election process and the 65 percent approval requirement.
Mr. Slack discussed the investment programs and distributed assets of the FPPA. He said that net investment assets totaled $3.7 billion at the close of 2012. These assets are held in the Fire and Police Members' Benefit Investment Fund ($3.40 billion) and the Fire and Police Members' Self-Directed Investment Fund ($0.32 billion). Net investment returns are up 7.1 percent and 11.9 percent for the two funds respectively, resulting in higher investment fund balances.
Mr. Slack discussed the impact of the financial crisis in 2008, which resulted in a 29.4 percent decrease that year. The FPPA has changed the structure of the investment program portfolio in order to protect against downside risk by limiting purchasing participation during high and low periods of the markets. Mr. Slack answered questions from the commission regarding the Public Employee Retirement Association (PERA) and how its returns compare with the FPPA plans. He answered questions regarding annual audits and the input of the audit reports.
02:13 PM -- Kim Collins, Chief Operations Officer of the FPPA, discussed current accounting standards and the Governmental Accounting Standards Board (GASB). She said that the FPPA is working with a variety agencies to assist local pension plan boards to address new requirements. Ms. Collins discussed the two different standards used for reporting requirements in future audits.