MINUTES OF A REGULAR MEETING OF THE
BOARD OF DIRECTORS
VLCT EMPLOYMENT RESOURCE AND BENEFITS (VERB) TRUST, INC.
OCTOBER 11, 2022
VLCT OFFICE – MONTPELIER, VT
Directors present: Bill Shepeluk, Charles Safford, Kathleen Ramsay (remote), Carrie Johnson and Todd Odit (remote)
VLCT staff present: Joe Damiata, Ted Brady, Seth Abbene and Kelley Avery (remote)
Others present: John Hanna (Liscord, Ward & Roy)
A quorum was confirmed, and the meeting was called to order at 10:37 a.m.
Upon motion (Safford/Johnson), duly adopted, the board voted unanimously to approve the agenda.
Upon motion (Safford/Johnson), duly adopted, the board voted unanimously to approve the minutes of the August 18, 2022 meeting.
Joe Damiata provided a brief organizational update to the board including the following items:
- Town Fair was a great success and staff has received a great deal of positive feedback.
- Staff is working on implementing the new Association Management System which will be rolled out by hopefully February next year, prior to Town Meeting Day.
- Kathleen Ramsay was appointed as second alternate to the PACIF Board at their meeting on September 30.
- VLCT will be sending out a member satisfaction survey this week, and board members are encouraged to respond.
- The December board meeting time will change so that all boards will be able to meet on December 15th at VLCT in person.
Todd Odit provided a brief report of the Joint Investment Committee meeting which was held on September 16, 2022. President Shepeluk was unable to attend the meeting. Dan Smereck of Strategic Asset Alliance reviewed consolidated investment returns through the second quarter of this year which were -10.19% net of fees, slightly above the benchmark. Jason Bilodeau and Jim Kaniclides of Insight reviewed the economic outlook and fixed income portfolio performance. VERB’s portfolio slightly underperformed the benchmark with a return of -7.16%. Interest rates are expected to continue to rise while investments will continue to be hit hard into next year, with inflation expected to peak some time by the end of 2023. The committee also reviewed activity with Ted Brady and the local investment sub-committee on potential Vermont-based local investments, which Mr. Brady will have more detail on sometime early next year.
Upon motion (Safford/Johnson), duly adopted, the board voted unanimously to accept the Report of the Nominating Committee.
Joe Damiata reviewed the draft, preliminary VERB budget for 2023. Overall, the budget is relatively flat compared to 2022. General and administrative expenses are down 2% or $4,717. Some expenses were reallocated from VERB to PACIF and some line items were reduced to better align with actual costs. Revenues are up 1% or $7,711 due to proposed average rate increases. This brings the total budget up just $2,180 or .3% compared to the 2022 adopted budget. These figures are not expected to change greatly from now to when the final budget is presented at the December meeting.
John Hanna of Liscord, Ward & Roy presented the actuarial analysis for the 2023 program year funding. Mr. Hanna reminded the board that 2020 is still being excluded from the analysis, as per the direction of the board and VLCT staff, due to 2020 being such an anomalous year with the exorbitantly high claims due to the pandemic. 2021 claims were used, but net of federal credits as these costs were more in line with cost norms prior to the pandemic. Mr. Hanna noted that other clients he serves are using this same approach to their 2021 costs as well. Mr. Hanna also pointed out that the change in the state’s taxable wage base from $15,500 to $13,500 for 2023 factored heavily into the proposed rate structure. The actuary has proposed a 6.1% average rate increase for 2023 at the 80% confidence level. If the taxable wage base had remained at $15,500 for next year, the same funding at the 80% confidence level would have yielded a 5.3% average decrease. A rate increase is necessarily imposed when there is a taxable wage base decrease to offset the collection of premiums at the new, lower taxable wage base level. Mr. Hanna further explained that rate increases will of course differ by member based on their own group’s total wage exposures and their claims experience, using the best four out of the last five years to determine their individual member benefit ratio.
Mr. Hanna reviewed the rationale for confidence levels outlined in the report. The 80% confidence level denotes that there is an 80% probability that contributions raised at this proposed level will be enough to cover the cost of the claims for the fund year. Mr. Hanna also explained a new exhibit in the analysis on Page 13, Table B, which shows various scenarios for arriving at a Projected Unrestricted Net Position. The illustration does not take into account the latest Trust financial figures. Joe Damiata suggested staff develop a Target Net Position Policy using Mr. Hanna’s proposed table as a guide, similar to a policy the PACIF Board has in place, and staff could present this to the board at its next meeting. The board was agreeable to this suggestion.
Upon motion (Safford/Johnson), duly adopted, the board voted unanimously to accept the report of the actuary as presented.
Upon motion (Safford/Ramsay), duly adopted, the board voted unanimously to approve the 2023 UI Trust rates at an overall average increase of 6.1% at the 80% confidence level.
In addition to proposed rates and the projected net position figures, the board and staff also discussed staff’s recommendation to return $100,000 in contribution credits to members for 2023. The board was agreeable to this figure, but also asked staff to take an in-depth look at excess surplus and how this could be used for the good of the membership. This discussion will be continued at the December meeting when staff presents its draft net position policy.
Upon motion (Safford/Odit), duly adopted, the board voted unanimously to approve a contribution credit in the amount of $100,000 for the 2023 UI Trust renewal.
There was no other business.
Upon motion (Safford/Johnson), duly adopted, the board voted unanimously to adjourn the meeting (11:58 a.m.).