Despite efforts to shore up the Government Employees Retirement System in the wake of a highly critical federal audit, the system’s cash flow seems to be getting worse instead of better.
Legislative attempts to dip into the cookie jar – one of the problems cited in the audit – is continuing, and the government’s attempts to save money by encouraging early retirement – also noted in the audit – is adding to the strain.
The GERS board met Wednesday night and Thursday to grapple with these and myriad other issues.
The board accepted without discussion a staff report on cash flows comparing the first half of Fiscal Year 2012 (October 1, 2011-March 31, 2012) with the same period in FY 2011. The bottom line shows a cash flow deficit of $66,569,950 for the current year, compared with a deficit of $38,441,127 for last year.
A major factor is a decrease in contributions to the fund both by employees and by the employer, the V.I. government. Employee contributions were $21,943,979 the first half of FY 2011, and dropped to $18,391,150 this year. Employer contributions decreased more significantly, from $42,772,930 to $31,880,784 in the respective time periods.
GERS administrator Austin Nibbs told the board that the government’s latest workforce reduction affected 363 people, 351 of whom so far have been added to the GERS rolls. “It cost us a lot in overtime” just to complete the necessary paperwork, he said, estimating that cost at $450,000.
On the agenda for the two-day meeting was an item labeled “Waive employer share of prior period contributions prior to March 12, 2012.” The board voted unanimously to move the item to the portion of the meeting held in Executive Session, which was closed to the public.
Board Chairman Raymond James said matter involved discussion of individual cases and legal matters, and thus falls under the exemptions to the Sunshine Act/Open Meetings law.
Nibbs read correspondence from Sen. Alicia “Chucky” Hansen asking for input on a bill she proposed to give additional retirement benefits to veterans, and he noted she has two other proposals in the hopper that would also increase benefits for special groups, one for Water and Power Authority employees and one for hazardous duty employees.
Nibbs called the proposals “very detrimental,” and the board concurred.
“This is an election year and this is a ploy to get votes,” said board member Carver Farrell. He urged staff to issue a press release on the subject, saying that such legislation is good for a few GERS members, but bad for the rest.
The U.S. Interior Department Inspector General’s audit of the system issued September 2011 listed “unfunded legislative mandates” as one of three factors straining the system which should be corrected. The other two were insufficient contribution levels and an “unhealthy ratio” of active to retired members.
Not all the news was bad. Bruce Thomas’s Investment Officer Report included information indicating that the system is improving its compliance performance. He said last year GERS received 20 “alerts” suggesting regulation problems in one fund or another. This year the number is down to just six alerts. As of Tuesday, he said, the value of the total fund was $1.05 billion.
Charmaine Modeste, internal auditor, reported she is making progress on implementing the new V-3 System, upgrading record-keeping and general administration. She said she also has been training staff on the new system.
Before going into executive session, the members decided on a time and place for a board retreat, to include a workshop on fiduciary responsibility and various other sessions, from June 28-30 at the Westin on St. John.
All members were present for the open portion of the meeting: James, Farrell, Vincent Liger, Judge Edgar Ross, Dr. Wilbur Callender, Leona Smith and Desmond Maynard.
Items on the agenda for the Executive Session, besides the waiving of employer share of contributions were:
– Proposed fee increase for Jaredian Design Re: conceptual design Estate Coakley Bay;
– Update- Seaborne Airlines loan modification;
– Update-Carambola Northwest loan modification;
– Northshore Partners Inc.;
– Kazi Foods of the Virgin Islands Inc.;
– Golden Resorts LLLP;
– V.I. Finest Foods LLC;
– Supplemental Contribution program;
– Andre Wright Presentation.
