Possible Amendment to Pension Board Ordinance

Possible Amendment to Pension Board Ordinance

Postby Marshall Stair » Wed Aug 13, 2014 7:31 am

Fellow Council Members,

I am considering making an amendment to the proposal to add two new members to the pension board. If I make the amendment, it simply reverts the proposal back to its original form where the Mayor appoints and Council confirms the two new members rather than the new members being selected by the Pension Board. I am considering doing this for the following reasons:

1) These two members are being added to bring an independent citizen perspective to the Pension Board. This is evidenced by the fact the new members must be city residents and cannot be city employees or pension member participants. They are also being added for their financial expertise, which is the other important requirement. That being the case, the two new representatives should be selected by the Mayor and Council and not the Pension Board, the majority of whose members are selected by city employees. The original proposal provides a check and balance system that may be of more benefit to everyone one, including the taxpayer. The Mayor and Council do not select the employee representatives on the Pension Board, so the employee controlled Pension Board should not select the two new citizen representatives. Having the Pension Board rather than the Mayor select these new representatives will defeat, in the opinion of most citizens, the very purpose of the proposal, which is to give city residents who do not participate in the pension an independent voice on the Board.

2) I also believe that qualified individuals with the type of financial expertise we are seeking will be much more likely to serve on the Pension Board if the Mayor asks them to serve than if their nomination is subject to Pension Board approval. As we all know, service on the Pension Board is voluntary and it is difficult work, with long meetings that regularly deal with tough, complicated and often controversial issues. I fear that many well qualified individuals will not be willing to go through what could be a politically-charged approval process with no guarantee that their nomination will be approved, if the Pension Board selects these new representatives. I believe those same individuals will likely be much more willing to serve out of an obligation of civic duty if they are asked by the Mayor to serve their city.

The Mayor represents the citizens of Knoxville and she should select the citizen representatives, subject to Council confirmation, and thus help give taxpayer/citizens a voice on the Pension Board. In my opinion, leaving it as proposed does not fully achieve the goal of adding an independent citizen perspective and in my opinion would not be a step forward.

I would appreciate any feedback via the forum as I consider making this amendment.

Thank you for your consideration.

Marshall Stair
Marshall Stair
 
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Re: Possible Amendment to Pension Board Ordinance

Postby Nick Della Volpe » Wed Aug 13, 2014 10:07 am

Well said, Marshall.
In addition:
1. If the employees control this, the net result, or at least perception, is likely to be illusory, as viewed by the citizenry. Independent voices are needed to provide a balanced picture to the members and to the voters. The financial expertise these 2 persons would bring to the table can only help improve the dialogue and decision-making. The Mayor should be free to solicit the best persons for the job. And she must do it in public view.

2. Objective credibility of the process. As a practical matter, every single member of that Pension Board, including the Mayor and Chief Financial Officer -- all of whom are doubtless good people with good intentions, nonetheless they have an inherent conflict of interest in that they have a direct financial interest in the outcome. The plan pays them and their beneficiaries. Yet the taxpayers have only an indirect voice. Those taxpayers are currently paying a huge annual sum into this plan ($24M this year, on the way to $30M, compared to some $3.8M by employees) and, as currently structured, must shoulder any market or actuarial shortfall realized by the plan. (Note: Taxpayers are paying those costs at a 6 to 1 ratio compared to employees).

3. Everyone has a interest in sound decision making.

Thank you for beginning the dialogue.
Nick D
Nick Della Volpe
 
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Re: Possible Amendment to Pension Board Ordinance

Postby George Wallace » Wed Aug 13, 2014 2:02 pm

I think your proposal has merit and is worth discussing.
George C. Wallace
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