VLCT Employment Resource and Benefits (VERB) Trust, Inc.
Board of Directors Meeting
Thursday, April 30, 2020
Via Telephone and GoToMeeting
Directors present: Bill Shepeluk, Todd Provencher, Charles Safford, Kathleen Ramsay, Carrie Johnson and Chris Hoyt
VLCT staff present: Maura Carroll, Joe Damiata, Jeremiah Breer and Kelley Avery
Others present: Magali Welch, Laura Macuga and Troy Dane (Johnson Lambert)
The meeting was called to order at 9:31 a.m.
Joe Damiata noted that he would like to add an additional item to the agenda to discuss the Board Compensation Policy under Other Business.
Upon motion (Ramsay/Provencher), duly adopted, the board voted unanimously to approve the agenda as amended.
Upon motion (Safford/Ramsay), duly adopted, the board voted unanimously to approve the minutes of the December 12, 2019 meeting.
Joe Damiata presented the board with the organizational update. All VLCT staff are working from home except for periodic critical tasks that need to occur in the office. Operations are business as usual and members should be seeing no disruption in service. When re-opening is allowed, VLCT will likely only allow critical staff into the office. Otherwise, the work-from-home policy will remain in effect for the foreseeable future.
Jeremiah Breer reviewed the unaudited financials through March 31, 2020. Net position is down due to an operating deficit and investment loss from the turbulent market as the result of COVID-19. Liabilities are also down for the quarter with claims coming in lower than expected compared to Q1 of last year.
Upon motion (Ramsay/Provencher), duly adopted, the board voted unanimously to accept the unaudited financials through March 31, 2020.
Kelley Avery reviewed the UI Program Summary Analysis through 2019. Both claims frequency and costs decreased from 2018 to 2019, with a 38% decrease in claims frequency and a 10% decrease in claims costs. Member contributions have steadily declined since 2015 due to rate reductions and lower confidence levels selected. However, contribution credits to members have remained relatively level, at roughly $300,000 or more, since 2016.
Q1 claims reports were not available as Q1 bills were just received and are still being reconciled. Early estimates show claims charges for the first quarter have decreased compared to totals from the first quarter last year, so it is likely any COVID-19 related layoffs or furloughs from March are not included in these figures.
Upon motion (Safford/Johnson), duly adopted, the board voted unanimously to accept the UI Program Summary Analysis through 2019.
Magali Welch, Laura Macuga and Troy Dane presented the results of the 2019 VERB Trust audit. Ms. Welch reported this was an unmodified, clean audit for 2019 with no material weaknesses or adjustments. Laura Macuga reviewed the financial statements, and Troy Dane provided a brief overview of the testing process. Ms. Welch pointed out the Trust has the option of incorporating new, Key Audit Measures (KAMs) into future audits, but this is purely optional and would have an associated cost.
Upon motion (Safford/Provencher), duly adopted, the board voted unanimously to accept the 2019 VERB Trust financial audit.
Joe Damiata reported there would be a 0% increase for the Northeast Delta Dental (NEDD) renewal for both the July 1 and January 1 VLCT pool groups. Staff received notice that due to COVID-19, NEDD has enacted a rate hold for all of their fully insured groups renewing July 1 through September 1. Our initial renewal proposal was set to increase rates by 2.12% before this rate hold went into effect. Kelley Avery reported VERB Trust members will receive an email notification on the renewal this afternoon, and a hard copy mailing will go out next week.
Upon motion (Johnson/Provencher), duly adopted, the board voted unanimously to accept the Northeast Delta Dental rate hold for the July 1 and January 1 renewals.
Bill Shepeluk reported on the March 13 Joint Investment Committee meeting. Representatives from Strategic Asset Alliance (SAA) and Mellon attended by phone due to COVID-19 travel restrictions. Although the VERB Trust portfolio had a strong performance for 2019, the markets were already starting to encounter volatility at the time of the meeting due to impacts from COVID-19. Neither SAA nor Mellon had any recommendations for changes to the portfolio. The committee decided at the March 13 meeting to recommend putting investment consulting services out to bid as SAA has now served VLCT for over 10 years. Joe Damiata and Jeremiah Breer explained the request for proposals will likely be posted on the AGRiP web site, and staff intends to have the Joint Investment Committee involved in the candidate selection process. The PACIF Board already approved this RFP recommendation at their last meeting, and the VLCT Board will also be voting on this next week.
Upon motion (Ramsay/Safford), duly adopted, the board voted unanimously to approve putting the Investment Consulting Services out to bid.
Jeremiah Breer reviewed the PACIF line of credit, which the PACIF Board approved at their March meeting. This would extend a $250,000 line of credit to VERB should the Trust require it in case cash is needed quickly as a result of high unemployment claims due to COVID-19. Staff does not anticipate the Trust will need to use it, but it will be a welcome safety net to have in place if needed.
Upon motion (Safford/Provencher), duly adopted, the board voted unanimously to accept PACIF’s $250,000 line of credit extension and authorize the Deputy CFO for the Trust (Jeremiah Breer) to sign.
Joe Damiata and Kelley Avery reviewed COVID-19 related activity at the VLCT staff, state and federal levels. Mr. Damiata reviewed the types of assistance staff have been providing the members as a result of the COVID-19 impact to unemployment and health insurance. VLCT staff have been providing updates to all VLCT members three times a week via email with COVID-19 related information and resources and have also been posting these updates to our web site. Staff has also been in contact with the VT Department of Labor (VDOL) on a weekly basis to get updates and gather information regarding unemployment issues. As of this week, the VDOL was consulting with the US Department of Labor (USDOL) on guidance the USDOL just released on how to manage and process the reimbursable employer provisions to the federal CARES Act. This is an ongoing and ever- changing landscape, and staff will do their best to keep members informed of any updates and changes moving forward.
Additionally, Kelley Avery developed a projection model to estimate possible worst-case scenarios for overall claims costs resulting from COVID-19 layoff and furloughs. This model was based on the types of layoffs we are hearing about from members and those departments which seem to be most commonly impacted. Unfortunately, staff will not have impacted unemployment claims data until further into the second quarter. VLCT will also be surveying members on a number of COVID-19 related issues including unemployment, so this will assist us in gathering more data and narrowing the scope of the claims model. Staff will keep a close eye on the unemployment claims development moving forward and will notify the board if it appears an additional meeting is needed prior to the scheduled August 13 meeting.
For the legislative update, Kelley Avery reported the primary focus at the State House is COVID-19 and mitigation measures. For the most part, any bills introduced prior to the state emergency have been placed on hold. H.742 (Act 91) was passed which allows for unemployment eligibility related to COVID-19, but no other bills thus far impact VERB directly.
In other business, Joe Damiata noted the current Board Compensation Policy does not allow for board members to be paid when meetings are held by phone. The board will be paid for today’s meeting, but unless the board decides to modify the existing policy, the board will not be paid for future phone or web-based meetings moving forward. The board decided to table the compensation policy discussion and revisit at a future date, if necessary.
Upon motion (Safford/Johnson), duly adopted, the board voted unanimously to adjourn the meeting (11:40 a.m.).