TRANSMITTAL LETTER FOR BOARD MEETING OF FEBRUARY 21, 2008
COMMITTEE ON PENSION, PERSONNEL RELATIONS AND CIVIL SERVICE
Mr. Richard Lanyon, General Superintendent
Title
2007 Annual Report for the Deferred Compensation Plan and Trust
Body
Dear Sir:
The District has sponsored a deferred compensation plan for employees since 1977. The Board of Commissioners adopted the Deferred Compensation Plan and Trust (Plan) effective September 1, 1998. The Plan and Trust document has been revised and restated several times since then. The Plan and Trust document provides that the Deferred Compensation Committee shall submit an annual report to the Board of Commissioners.
At the Board Meeting of January 18, 2007, the Board of Commissioners amended the Plan to permit participants to defer certain wages after retirement, as long as payment is made within 2½ months of retirement. The Board of Commissioners also approved a change to permit participants whose employment is interrupted by qualifying service in the armed forces to contribute additional funds to the Plan upon resuming employment. Both changes were made in conjunction with Internal Revenue Service (IRS) guidelines and final regulations relative to the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
Also, at the Board Meeting of January 18, 2007, the Board of Commissioners approved revisions to the Plan’s Investment Policy to change the market benchmarks for the following investment options: the Stable Value Option, the Balanced Option, and the Mid-Cap Index Option. The new benchmarks provide greater accuracy for evaluating and comparing the performance of each investment option.
At the Board Meeting of September 6, 2007, the Board of Commissioners amended the Plan to allow non-spouse beneficiaries to rollover their account balance to an Inherited IRA. Approval was also granted for a new provision that extends the availability of emergency withdrawals for financial reasons to a participant’s primary beneficiary. Both elective changes are permissible under the Pension Protection Act of 2006.
At the Board Meeting of October 18, 2007, the Board of Commissioners awarded a Purchase Order to Mesirow Insurance Services, Inc. for fiduciary liability insurance protecting all plan fiduciaries from legal action brought by Plan participants due to their actions in their fiduciary capacity.
In November, 2007, Hill, Taylor, LLC, Certified Public Accountants selected by the Finance Department, issued their independent auditor’s report of the Plan as of December 31, 2006, and concluded that the Plan’s financial statements were in conformity with generally accepted accounting principles.
At the Board Meeting of December 6, 2007, the Board of Commissioners awarded a Purchase Order to Segal Advisors to provide deferred compensation investment consulting and third-party administrator selection services for a three-year period.
The Plan balance as of December 31, 2007 was $140,743,771. This represents a net increase of $9,847,361 since December 31, 2006. The year-end balance included $89,561,493 in mutual funds, $50,297,488 in stable value funds, and $884,789 in self-directed brokerage accounts.
There were 1,788 participants, including active employees and retirees, in the Deferred Compensation Plan as of December 31, 2007. There were 169 individual accounts with balances in excess of $200,000, 341 with balances between $100,000 and $200,000; 158 with balances between $75,000 and $100,000; 212 with balances between $50,000 and $75,000; 293 with balances between $25,000 and $50,000; and 615 with balances under $25,000.
As provided in the Trust document, the annual report includes, as Exhibit I:
1. a balance sheet of the Plan at year-end,
2. a statement showing changes in assets available for distribution,
3. a statement of investments as of year-end.
The Deferred Compensation Committee is pleased to submit this report to the Board of Commissioners.
Respectfully submitted, Patrick J. Foley, Director of Personnel, SOM
Recommended, Harold G. Downs, Treasurer
Recommended, Gloria Alitto Majewski, Chairman, Deferred Compensation Committee