Present: William Baker, Dennis Davito, Michael Duffy, Pamela Rosenberg, Jerry Zar

Guests: Steve Cunningham, Shey Lowman, Paul Stoddard

The meeting was called to order by Jerry Zar. Chair Deborah Haliczer was unable to attend the meeting. Guests were introduced. Minutes and agenda as amended were approved.

Guest: Steve Cunningham, Associate Vice President, Administration and Human Resources, for discussion of pension and benefit issues

1. Rates for FY06 and FY07 have been established for the Money Purchase Plan by SURS. Per SURS, FY06 is 8.5% (same as FY05) and FY07 is 8.5%. The controller wants to set it at 8%. This can be seen as unconstitutional and can drive litigation, as is a reduction in benefits.
2. Controller focused greatly on future rate of return—this year determined to be 7% so it is believed that they will try to get the SURS Money Purchase rate down to be closer to that. Will push the employee groups to lobby.
3. Elimination of Money Purchase for new employees – This is a huge issue for SURS, as more SURS employees retire under Money Purchase,
4. Illinois has the greatest unfunded pension liability in the US.
5. Employer payment obligation
   1. Employer must make a present value payment of the long term actuarial value of the amount above 6% during the 4-year average to SURS.
   2. This is for the last completed academic year and will be a big issue in FY07.
   3. The rules do not cover Money Purchase retirement which excludes 2/3 of NIU retirements.
   4. Relates to earnings, not just salary. Are arguing that earnings should be excluded as they are for other things, i.e. vacation payouts.
   5. JCAR may knock out Money Purchase exception and may continue with the earnings. If so, it will move to litigation.
   6. Creates another unfunded liability.
6. The Act also created a new Pension Advisory Committee.
   1. Established with the duty to report to legislature and government concerning funding and benefit changes, i.e. age to retirement ratio, COLA of 3%, and employee contributions.
   2. Met for the first time in October, and met 3 times.
   3. Is highly represented by labor.
   4. Roland Burris is the chair.
   5. Are approving 7 motions as a package
   6. Are considering more bonds for funding
   7. Are reviewing the 95 funding package to determine if 50 years is the right timeframe for the plan.
   8. Will review dynamic scoring, i.e. good times deposit more, bad times, deposit less.
   9. Will consider the impact of benefit cuts – 2/3 of committee have participant interests at heart.
   10. Will report to NIU by 11/1/05.
7. The Speaker and Governor are working on a Pension Reform Bill to be presented at veto session.
   1. All pension systems would fall under the Illinois Procurement Policy.
   2. Governor would appoint a procurement officer to help select pension portfolio managers. Every 5 years pensions would be required to liquidate and get a new portfolio manager.
8. Jim Hacking is leaving his position at SURS.
9. Acting Executive Director of SURS is Dan Slack. He is part of the national search for a new director.

Old Business:

1. Domestic Partner Insurance Reimbursement and Domestic Partner Benefits
   1. Dennis Davito reported that the forms and format are in their final stage and have been sent to President Peters for final approval. If there are any changes to be made, the committee will be apprised.
   2. Currently are working on systems on how to handle the reimbursements while protecting employees’ privacy. There will be no SURS withdrawals or tax withholding from the reimbursement. The reimbursements will take place quarterly. There is a secure filing system in place to protect privacy.
   3. Waiting on a timeline and an implementation date.
   4. Total amount of people using this type of program in Illinois last year was 15-20, including both same and opposite sex. Largest number was at UIUC which had 4-5. SIUC had 3 and all other universities had 1-2. Dennis would assume that between 5 and 10 NIU employees would use this program and seek reimbursement.
2. Domestic Partner Dependent Tuition Waiver Status
   1. Steve Cunningham discussed this with President Peters and Eddie Williams, and there is a low probability of success as there are conflicts with state statutes, for which we are audited.
   2. If we were to take the money out of the NIU allocation of funds for tuition reimbursements, it would be tough to do as athletics and other departments pull from that same pool of money.
3. Update on 403(b) and 457 Review
   1. Steve Cunningham explained what is happening with this review.
   2. In 2001 the federal government amended the internal revenue code allowing the public sector to participate in 403(b) and 457 plans, having the cap of maximum deferrals be defined as the total of both combined—approximately $30,000/year.
   3. The public universities in Illinois each have their own 403(b) plans and one state 457 plan with CMS. The 457 plan does not include TIAA/CREF.
   4. The amended board regulations allowed NIU to offer their own 457 plan option, but to do so, NIU had to have their own internal plan document. NIU checked with the 403(b) companies to see if any of them offered 457 plans, and they did, but all the companies had problems with NIU’s plan documents, so the parties involved have been working through the issues with the plan document. Some of the issues are substantive, but work is being done so companies will accept it.
   5. It was decided to go ahead and update the 403(b) plans while working on the 457 plans so a committee was created and did an RFP. The committee is waiting to launch the RFP until the internal plan document is complete. Having this plan document is a precursor to doing the RFP.
   6. Per Steve, what NIU offers is more, and better, than other state universities in Illinois. NIU is ahead of other universities because they don’t want to have their own 457 plan, while NIU is working on getting one.
   7. William Baker requested fund and company performance reports for those plans that NIU offers. Dennis was asked to pull a fund performance report and a 5- and 10-year performance report for all the companies and their funds to share.
   8. A comparison of performance is what is needed, such as a summary of returns so information can be provided to employees without giving them advice. Employees can also go to Morning Star online to get past performance of funds.
4. Vacation Accrual and Loss Proposal – Deferred
   1. Steve Cunningham took a copy of the information for his review.
   2. Review the email from Pamela Rosenberg to discuss at the next meeting.
5. Parity for Vacation Accrual Rate across Employee Groups – Deferred
   1. Steve Cunningham took a copy of the information for his review.
   2. Review the email from Pamela Rosenberg to discuss at the next meeting.
6. Summer Work Schedules
   1. Steve Cunningham is working with Eddie Williams to plan for the summer work schedules and let employees know if it is being implemented sooner.
   2. The summer work schedule is budgetary driven, so that is why the timing works out the way it does. The summer work schedule has to be tied to the budgetary savings.
   3. Ideally employees would like to have the implementation announcement in January or early spring, but that may not be possible.

New Business:

1. Committee Priorities for FY06 - Deferred
2. Other – Winter Closure
   Questioned whether there has been any discussion to close longer over winter break in order to save on the increase in natural gas costs.
   1. Steve said it was talked about last year but not sure about expanding the break this year.
   2. Would have to require employees to take 2 days of vacation, with 2 holiday days paid by the university. Is unlikely to happen this year.
   3. Was noted that employees would like to know soon in the fall semester so they can save vacation days to use.

Next meeting:
January 19, 2006, 10:00 a.m., location to be announced.

Respectfully submitted,
Pamela Rosenberg, Co-Secretary, University Benefits Committee