AGENDA

RETIREMENT AND INDEPENDENT ENTITIES

INTERIM COMMITTEE

UTAH LEGISLATURE

Approximate time frame

Wednesday, November 12, 2014 • 2:00 p.m. • Room 30 House Building

2:00 1. Committee Business

· Call to order

· Approval of minutes of the September 10, 2014 meeting

2:05 2. Utah Retirement Amendments (draft legislation)

Utah Retirement Systems (URS) annually recommends changes in statute to keep the Utah State Retirement and Insurance Benefit Act updated by addressing issues identified in the previous year and by making technical changes. URS will explain recommended changes.

· Dee S. Larsen, Legal Counsel, Utah Retirement Systems

2:20 3. Utah Retirement Systems Revisions (draft legislation)

During the May meeting, the committee voted to have legislation prepared based on recommendations by URS. The Legislature made significant retirement system reforms for URS systems and plans during the 2010 General Session. Public employees initially entering full-time employment on or after July 1, 2011, are members of the new "Tier II" retirement systems and elect to participate in either a hybrid or defined contribution plan. The Tier II systems provide reduced benefit levels for employees and require lower employer retirement contributions. URS will explain recommended Tier II system changes.

· Dee S. Larsen, Legal Counsel, Utah Retirement Systems

2:35 4. Retirement Contribution Rates

Contribution rates are the percentage of salary that participating employers must pay to the Utah State Retirement Investment Fund for each eligible employee to keep retirement systems funded on an actuarially sound basis. The rates are set based on actuarial projections and must be approved annually by the Utah Retirement Systems Board. The committee will hear an explanation of the proposed rates for FY 2016.

· Daniel D. Andersen, Executive Director, Utah Retirement Systems

2:50 5. Implementation of New Government Accounting Standards Board (GASB) Standards – Update

In June 2012, the GASB approved new standards (GASB 67 and 68) that change how governments calculate and report the costs and obligations associated with pensions. The new standards are designed to improve the usefulness of pension information and to increase the transparency, consistency, and comparability of pension information across governments. The later of the two new standards went into effect for fiscal years beginning after June 15, 2014. State and local government employers must now report their proportionate share of Utah Retirement Systems Net Pension Liability on their balance sheets and significantly expand footnote disclosures. This means that employers who have never had a pension liability on their books will have to report one. The committee will hear a review and update on the new standards.

· R. Kim Kellersberger, Finance Director, Utah Retirement Systems

· John C. Reidhead, Director, Division of Finance, Department of Administrative Services

3:10 6. Defined Contribution Investment Options – Update

URS will soon roll out new “target date funds” investment options to replace the Horizon Funds currently available to URS members through 401(k), 457, and other investment accounts. A target date fund is a professionally managed, diversified fund which dynamically invests in a combination of stocks, bonds, and other asset classes over the course of a member’s lifetime. These funds provide automatic rebalancing based on the member’s age. As a member gets older, the asset allocation becomes more conservative. URS will explain the program and its planned roll out.

· Craige D. Stone, Director Defined Contribution Savings Plans

3:20 7. State Employee Benefit Implications for U.S. Supreme Court Rulings Legalizing Same-sex Marriage – Update

On October 6, 2014, the United States Supreme Court denied review of a 2014 Utah case, Kitchen v. Herbert, in which the 10th Circuit ruled that Utah's constitutional and statutory prohibitions against recognition of same-sex marriage could not be justified against due process and equal protection challenges. These rulings have legalized same-sex marriage in the state. URS will give a brief update on the implications of recognition of same-sex marriage on state employee spousal benefits.

· Dee S. Larsen, Legal Counsel, Utah Retirement Systems

3:30 8. Utah Capitol Investment Corporation Audit – Follow-up

During the September 10^th meeting, the committee heard audit findings and a response from the Utah Capital Investment Corporation on the Legislative Auditor General’s audit “A Performance Audit of the Utah Fund of Funds," dated August 2014. In the meeting, the committee asked for a follow-up to check the progress of implementing audit recommendations. The auditors will present the audit follow-up progress to the committee.

· Darin Underwood, Audit Manager, Office of the Legislative Auditor General

· Brian Dean, Audit Supervisor, Office of the Legislative Auditor General

· Bret Jepsen, Managing Director, Utah Capital Investment Corporation

4:00 9. Department of Corrections Retirement Amendments (draft legislation)

A correctional officer in the Department of Corrections is covered under public safety retirement systems. Other employees of the department have also been considered eligible for public safety retirement. Going forward, the department would like to cover new employees that are not correctional officers under regular public employee retirement systems instead of the more expensive public safety retirement systems. Employees that have already been covered under public safety retirement, will not be effected unless they have a break in service after July 1, 2015. The department will explain draft legislation that has been prepared for this purpose for the committee’s consideration.

· Rep. Eric K. Hutchings

· Rollin Cook, Executive Director, Utah Department of Corrections

4:20 10. Private Retirement Security

While most public employees are covered by retirement plans, many private sector workers do not have access to an employment based retirement plan. Workers who are unable to build up pensions and savings risk living on low incomes in their old age and are more likely to become dependent on state services. A few states have considered various approaches to this issue in an effort to encourage and facilitate retirement savings for non-public sector employees whose employers do not sponsor retirement savings accounts. The committee will hear about potential approaches or perspectives from presenters on this issue.

· Sarah Mysiewicz Gill, Senior Legislative Representative, AARP

· Ted Lewis, Utah Counsel, American Council of Life Insurers

4:45 11. Supplemental Savings Plan Amendments

Beginning January 3, 2014, H.B. 194, “State Employee Benefits Amendments,” which passed during the 2013 General Session, eliminates future accumulation of unused sick leave for the postretirement benefit known as the Unused Sick Leave Retirement Program II for state employees. The bill also established a new benefit for state employees, requiring an employer to make a biweekly matching contribution to a qualifying employee's 401(k) plan. The committee will consider a bill to expand the type of account that may be used for the biweekly matching contribution.

· Rep. Rich Cunningham

4:55 12. Other Items / Adjourn