LEOFF 2 Board Meeting Report - September 21, 2016
A LEOFF 1/LEOFF 2 Merger?
There was nothing new on the merger issue except that Steve Nelson of the LEOFF 2 Board did a complete and detailed discussion of the issues. He really demonstrated how complicated the matter is. I would urge everyone to carefully read his presentation documents. Steve discusses the nature and structure of the LEOFF plan as well as its history. While we see a few items in his report differently it is still a well written and informative document that will provide the reader will a good understanding of how the system works, how it has been attacked and where it stands today.
No proposal for legislation or to create a LEOFF 1/LEOFF 2 merger was submitted at this meeting. As of now the board appears to just be gathering information. Our sources advise us that a LEOFF 1/LEOFF 2 merger proposal will likely be offered if the TRS 1/LEOFF 1 merger fails or as alternative to that merger.
The presentation does claim that a merger is legal. We disagree, at least in any of the formats thus far proposed. As the presentation makes clear there are so many issues and complications that almost any proposal is bound to run afoul of legal issues. Even as simple an issue of governance is not easy to resolve in such a way that the rights of Plan 1 members are protected or even considered. The tax issues are significant and all of the proposals seem to fly in the face of the Bakenhaus and Weaver court decisions.
These folks invest our pension funds, so it is important track how they are doing. All in all they do an excellent job but their report does point out certain dangers, one of which is avoiding the pitfalls of underfunded pension plans. I hope the legislature will pay attention to this advice and leave LEOFF 1 alone.
The Washington State Investment Board (WSIB) is one of the largest and most diversified institutional investment managers in the United States.
- $108.5 billion assets under management as of June 30, 2016
- 17 pension funds
- 5 Labor and Industries insurance funds
- 13 Permanent and other trust funds
This table shows the market value of the various funds managed.
How the funds are allocated.
- Employers and employees must maintain honest contribution rates as reflection of discount rates.
- Avoid the pitfalls of underfunded pension plans.
- Instill transparency with beneficiaries and stakeholders, not fear.
- Strong working relationships between WSIB, Actuary and Pension Funding Council
Another interesting presentation at the meeting was a report comparing LEOFF 2 to other open pension plans across the country. They review3d 160 public pension plans.
It shows the LEOFF 2 plan to be one of the best funded plans in the country, matched only by the DC police and fire plan. Additionally the benefits, funding status, expected rate of return and almost all other measures put the LEOFF 2 plan near the top.
This should be an interesting read to any LEOFF 2 member and valuable information for LEOFF 1 as well.
While there was no action coming out of the LEOFF 2 Board meeting, it was informative and provided a much better perspective of the entire pension issues that we have seen in the SCPP. The October 18, 2016 meeting will be held off-site. It is billed as a strategic planning meeting. Contact the LEOFF 2 Board for more information and location if you want to attend this meeting. I hope someone can attend this meeting as the board should not meet in private.
Roz and Jim Philbrick traveled from Sequim to attend this meeting. Their dedication is apprciated.