Benefits Committee
Meeting Minutes: January 13, 2009
Faculty and Staff Benefits Office
Bldg. 7, Woodrail Centre
Chairman Hahn called the meeting to order at 10:35 a.m.
In addition to the chair, those present included: June DeWeese, Jack Batterson, Roger Heath, John Bauman, Lisa Wimmenauer, Barbara Savio, and Mike Paden.
The revised minutes of the November 18 meeting were emailed everyone on Dec. 15, 2008 The Chair assumed that everyone approved them.
The Chair announced that Nikki Krawitz (UM Vice President for Finance and Administration) said, in an email note, that none of the University’s retirement fund was invested with the Madoff fund. Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960 and was its chairman until December 11, 2008, when he was charged with perpetrating what may be the largest investor fraud ever committed.
Paden announced that the pension fund is now worth $2.1 billion and it was worth $2.9 billion on October 1, 2007. That is a decline of about a 27.59%. The University pays about $13-$15 million on investment advisor fees. The University currently contributes 5.8% of salaries and wages every pay period to the retirement fund. This contribution might rise to 9% depending on the outcomes of the pension plan’s actuarial study. The results of the study and a recommendation will be presented to the Board of Curators in the near future.
The 2008 Annual Report of the University of Missouri Retirement Disability, Death Benefit will be made available online by early February, 2009. The University faculty and staff will be notified via email. The annual report will have extra information that was not covered in the previous reports, such as some information on investment managers.
President Forsee asked the University to look at different budget scenarios and assumptions to help the University cope with the possible 15% to 25% budget cuts from the State. Everything is on the table. There is a slim possibility of early retirement this year. However, offering early retirement increases the liability of the pension plan. The last two VERIPS (Voluntary Early Retirement Incentive Program) increased the plans liability by $100,000,000.
Paden announced that the contract problems with Vanguard have been corrected. People now should be able to transfer 403b money from a plan such as TIAA-CREF to Vanguard. The new PDP (Prescription Drug Plan) that MU started on January 1, 2009 as a Plan D plan through Express Scripts is working well. The only reported problem is that people are showing up at pharmacies with their old drug insurance cards.
The pension plan system is still healthy.
Savio asked if there was discussion on adopting the four-day workweek and the 80 and out concept. Paden said that the issues have not been discussed.
The University is working on how to deal with the potential 10-25% budget cuts. This is difficult to do because 75% of the costs are salary and wages.
Bauman asked about the “carve-out” provision in the medical benefits that affects mostly retirees. This is when the Medicare payment is carved-out (or subtracted) from the MU Payment, rather than the MU payment being calculated as a supplement to the Medicare payment. In simplified terms, the carve-out approach is one way of coordinating benefits with Medicare.
Hahn asked why charges from a recent hospital bill were removed from the final bill. Paden explained that MU may charge the full price for services, but with Medicare, the doctors get only the Medicare allowed rate. MU agrees to accept this lower rate of payment from those people with Medicare.
The committee discussed the article “Who's the Doctor? Insurers reject prescriptions to save money” that was in the January 12, 2009 issue of the Columbia Daily Tribune. The University of Missouri faculty and staff probably would not experience the same problems mentioned in this article because certain drugs can be grandfathered or patients can get waivers that would allow them to take exactly what the doctor ordered.
The next meeting is Tuesday, February 24, 2009, at 10:30 a.m. at the Faculty-Staff Benefits Office Conference Room, Building 7, Suite 210, Woodrail Center on Nifong. It is hoped that Dr. Betsy Rodriguez, the Vice Pres Human Resources, will be able to attend this meeting.
Respectfully submitted,
Jack Batterson
Secretary Pro-Tem
