June 18, 2009 — After spending a little more than two hours in executive session, Government Employees' Retirement System board members zipped through the rest of their agenda Thursday in about an hour, approving changes to the system's loan policy and administrative fee structure.
But first, a bevy of motions stemming from the executive session discussion hit the floor and were quickly approved — including three change orders for construction work being done at GERS' new headquarters on St. Croix and an ongoing technology project that would upgrade the system's benefits and loan software.
The board unanimously approved a $97,276 contract for Benton Construction, along with a $1.3 million change order for Vitech, the system's software provider, and a $380,622 change order for L.R. Weschler Ltd., the system's project manager, to cover a nine-month extension of the software upgrade project.
Board members accepted a recommendation made by GERS Administrator Austin Nibbs to become the lead plaintiff in a case brought against Wells Fargo for alleged violations of state and federal security laws. GERS had stock in the company and suffered a $2 million loss, Nibbs explained later.
Board members also approved a recommendation to hold onto some of their downgraded securities — Bank of America, BSABS 2006, Royal Bank of Scotland and Citigroup Junior Subordinated Hybrid — for an extra 90 days in hopes that the market might improve. The board's policy is generally not to hold on to securities whose rating drop below BBB- for more than 90 days, Nibbs explained later.
The system's overall portfolio is doing well, and system Chief Financial Officer Joseph Boschulte said Thursday that he is "cautiously optimistic" the trend will continue. As of Wednesday, the portfolio's overall value was $992 million, he said.
In the meantime, GERS will continue to monitor its cash, he said.
As of the end of May, GERS' total available cash was about $11.5 million, while total disbursements were $17.6 million — leaving a deficit of approximately $6.1 million. Year to date total cash available was $112.9 million, while total disbursements topped off at $148.3 million, leaving a year-to-date net deficit of $35.4 million.
While some of the usual revenue categories weren't factored in this month, the system is still averaging a deficit of about $3.5 million a month, Boschulte said. However, at the same time last year, the system's net deficit was higher — hitting $36.6 million.
"That shows that the additional three-percent employer (government) contribution is helping," he told the board.
Main changes approved to the system's loan policy were: an increase in the allowable mortgage limit for members from $250,000 to $300,000; an increase in the auto loan limit from $18,000 to $40,000; and giving retirees the option of re-financing their loans under certain conditions.
The board also voted to lower many of the system's administrative fees, eliminating charges for: amortization schedules, certified photocopies, copies of check stubs for retirees, copies of 1099s, copies of 1098s and photocopies. Fees for credit letters and verification letters for benefits dropped from $5 to $15.
Board members present Thursday were Raymond James, Carver Farrow, Vincent Liger, Desmond Maynard and Leona Smith.
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