LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT

Representative Steve Smith, Chair of the Legislative Commission on Pensions and Retirement, called the meeting to order at 5:10 p.m.

Representatives Sondra Erickson, Eric Lipman, Mary Murphy, and Steve Smith

Senators Don Betzold, Geoff Michel, Keith Langseth, and Cal Larson

Representative Philip Krinkie and Senator Lawrence Pogemiller

Sen. Betzold moved approval of the July 14, 2003, meeting minutes. MOTION PREVAILED.
Sen. Larson moved approval of the November 4, 2003, meeting minutes. MOTION PREVAILED.

Mr. Lawrence Martin, Executive Director, Legislative Commission on Pensions and Retirement, introduced Mr. Thomas K. Custis, Milliman USA, the consulting actuary retained by the Commission.

Mr. Custis provided an overview of the valuation results, saying 2002-2003 was a tough year. He identified the four funds that have been on the watch list (SPTRFA, MSRS-General, MSRS-Correctional, and PERA-General), remarking that the situation of these funds has deteriorated, and noted PERA-P&F has been added to the list. Mr. Custis also stated that MTRFA has experienced considerable deterioration and is currently in a critical situation.

Mr. William V. Hogan, Milliman USA, continued the presentation, referring members to the summary provided, which he reviewed fund by fund. Mr. Hogan provided some additional charts on funding ratio progress and concluded his prepared remarks. He then responded to members’ questions.

Mr. Martin reviewed the staff memo and the various options available for Commission consideration.

Mr. Custis said that Milliman USA is desirous of coming to terms with the Commission. He noted that errors and omissions insurance has become increasingly problematic for actuarial firms. Mr. Custis stated that the language proposed by Milliman USA represents the firm’s best effort, and is not a "take it or leave it" proposition.

Rep. Lipman asked about the specific status of the contract. Sen. Betzold responded that he had chaired the Actuarial Services Subcommittee when the present contract was bid, and that there were a number of additional contract options. Sen. Betzold recommended that the Executive Committee meet to look at the situation.

Rep. Lipman asked about the procurement deadline. Mr. Martin responded that there would be two timelines: 1) an absolute 30-day notice, which would be the end of May; and 2) if the contract were to be re-bid, a decision would need to be made in early March in order to provide sufficient time for a Subcommittee to be formed and to provide for the Request for Proposal and bidding process.

Rep. Smith announced that the Executive Committee would meet and report back to the Commission. Rep. Murphy recommended that the Executive Committee review the Subcommittee report.

The meeting adjourned at 6:30 p.m.