Travis County Commissioners Court
December 23, 2008
Item 6
6 is an item with many subparts and do we have everybody here on it?
probably ought to take it -- if we call the parts up separately, we can act on them, right?
6, consider and take appropriate action on agreements and policies for the deferred compensation program.
a, adoption of agreement great west retirement services section 457 b eligible deferred compensation plan for governmental employees.
my understanding previously nationwide did all of these things itself so now we're simply putting in place the various pieces to operate the program.
>> that's correct, yes.
>> so what is a about?
>> a is the adoption of the great west service agreement for the -- in essence what it is, we're adopting the great west plan as our own plan.
>> any questions about a?
we've known this was coming.
>> yes.
>> move approval.
>> second.
>> discussion?
all in favor?
that passes by unanimous vote.
Commissioner Daugherty temporarily off the dais.
b, 457 b plan for Travis County.
>> we currently have a loan agreement in our plan with nationwide.
this will be a similar plan that participants can borrow from their account, I believe it's up to 10%.
>> after 50% of their value.
>> and the loan agreement, it means that if you do a loan, you are borrowing from yourself, paying yourself back with interest.
>> this is a continuation of the current policy with another vendor?
>> exactly.
exactly.
>> that's why I move approval.
>> second.
>> discussion?
all in favor?
that passes by unanimous vote.
of those present.
c, agreement for record keeping and community you're communication services with great west life and annuity insurance company and the following authorizations: c 1, plan center authorization form and c 2 signature authorization.
>> this is information that great west needs to know who has authority to act on the behalf of the county.
>> and who is recommended in c 2?
>> signature authorization.
>> it is --.
>> go ahead.
>> okay.
we have two individuals from the auditor's office and two individuals from h.r.
and their names and pertinent information like social security numbers and things like that will be on the signature form.
and on this one we are requesting that the court authorize the judge to sign this so that, you know, we don't have to make personal information public like their social security numbers which are required because they will be authorized to access information.
>> questions?
move approval.
>> second.
>> all in favor?
that passes by unanimous vote of those present.
that was c 1 and c 2?
>> yes, sir.
>> plan center authorization form and then a signature authorization.
I'm signing.
but four individuals will be authorized to sign this form.
>> they will be authorized to access information.
>> ms. Wilson?
>> two different forms. One form is the form that allows people to get into the information that's held in the great west computer about our plan so that they can do things like change people's address or add new employees or indicate that people have quit.
there will be two people who would have -- three people who would have access to make changes, one from h.r.
and two from the auditor's office because that's usually done through payroll.
and the names of the people should be open so that the two from the auditor's office are charles vaughn and gregory jacobs.
and the one from the -- h.r.
who would have full authority would be norman mckey and dan would also have authority to get any reports he wanted.
the other thing is whenever anything needs to be signed, there will be some situations where signatures will be required, like for instance if several years from now you wanted to make a change to the plan document, somebody would have to sign on the new adoption agreement.
the signature authorization relates to that kind of thing for the five members of the Commissioners court, and in relation to signatures that are needed for distributions when somebody retires or has a hardship situation and need to take money out, those would be authorized by either charles vaughn or gregory jacobs.
also rollovers going into the plan.
>> barbara, did that change?
because we had at one time four individuals, two from auditor's and two from h.r.
>> there are two separate forms. On the form that relates to the access to the commuter, there are four.
two from h.r.
and two from the auditor.
the other form is one that relates to any time a signature is needed.
well, and for instance, if you decided to offer a new investment that required us to enter into an agreement, the signature would be the signature that was on the signature authorization that would count.
and your signature would be like Travis County by and the name of the person that's authorized.
in the event that the judge was not present on the day that it was approved, it was necessary to have everybody on the court's signature made available because it could be anybody signing it on that kind of a circumstance.
but only the court can sign for documents that -- for all documents.
the other situation is whenever anybody wants a distribution or a rollover, then charles or greg jacobs would be authorized to sign the assistive paperwork that goes with saying that they are eligible for it, that they either terminated or there's a hardship situation that's consistent with law that would allow them to get money distributed from the account.
>> questions?
this really is pretty simple, isn't it?
four people are authorized to commit Travis County to various aspects.
we list those four and then you have members of the Commissioners court from time to time.
>> if you want to make changes in the plan, yes.
>> that would be after formal action by the whole court.
>> yes, and that's what it said, after approval by the Commissioners court at a duly called meeting.
>> move approval.
>> second.
>> discussion?
anything else we need to know about this part?
>> we already voted on this.
>> I thought we had a motion and second.
did we vote?
c 1 and 2?
>> uh-huh.
>> that was good action there.
trying to make sure you are on your toes, ms. Porter.
d is section 457 custodian account with wells fargo.
>> this is just what it says, it's setting up a custodial, a 457 custodial agreement with wells fargo as part of the overall plan.
>> this is the bank that great west works with?
>> yes.
>> move approval.
>> second.
>> discussion?
all in favor?
that passes by unanimous vote.
>> e and f I'm going to ask someone else to talk about those.
>> let me bring those up.
e is participation agreement for putnam fiduciaryry trust company.
should he call them together?
>> whatever you prefer.
>> let's deal with e.
>> e is the agreement between the county and putnam that will provide the fixed investment option for the 457 plan.
it's a --
>> not fixed.
>> stable value.
>> not fixed.
>> I'm sorry.
the stable value option for the 457 plan that replaces the fixed account option that is currently in the nationwide contract.
>> questions?
so this has to be with some entity like this.
great west works with putnam, fiduciary trust.
>> when we created the r.f.p., one of the -- one of the objectives was to move away from a general account product, which is what we have today with nationwide.
and this putnam stable value fund is a separate account that accomplishes that objective.
and there were several option for us to choose from and putnam provided the better value to county employees in this plan.
>> since I don't know who putnam is, but you guys do, but my question is that if an employee decides to place their money, the deferred comp setting, into a stable value account, will they be able to move that money from one situation to another?
because what I understand that sometimes -- and I don't really know, you can answer the question will they be able to move that money from a stable account to any other.
>> like another mutual fund or international fund or small cap or large cap?
>> exactly.
>> yes, sir.
>> without any -- let's say they put it in this month, say next month I don't like that, I want to move it the next month.
is there a time line I guess on it to --
>> mike from great west retirement services.
the putnam stable value fund has 100% liquidity for the participant and for the plan.
so once the participant's money goes into that account, they have complete flexibility to move in and out of that stable value fund as frequently as a daily basis.
>> so you are not locked down.
>> exactly.
>> I want to make sure that comes across because --
>> there is no restrictions on your ability to move in and out of that fund.
that is another improvement -- they are plan.
>> okay.
thank you very much for the answer.
>> move approval.
>> second.
>> discussion?
all in favor?
that passes by unanimous vote.
f is agreements between barclays global investors and Travis County and f-1 investment management and custody agreement and f-2 guideline and fee arrangement.
>> another objective of the r.f.p.
was to make sure that we had a wide array of index funds available within the plan.
index funds are typically funds managed to a particular published index.
two of the index funds are being provided through mutual funds through traditional mutt you'll funds offered through van guard.
this arrangement is a -- addresses both the small cap and the mid cap index opportunities and they will be provided -- funds and they will be provided through barclays global and a pool trust account.
which is comparable to a mutual fund, but it's slightly different which is why it needs a separate agreement.
>> what's the difference now?
let's make sure we understand that.
>> this is a collective trust.
in a collective trust basically is where different entities pool their money for the purposes of vesting in a particular -- investing in a particular strategy.
so it's not public, it's not a traditional mutual fund, but it basically operates like a mutual fund.
and the money that goes into this option is held in trust for the exclusive benefit of the plan's participants.
along with other governmental entities that would be pooling their money in both a mall small and a mid cap index basis.
and the reality is there aren't a lot, there's not a lot of money in the county that goes into small and mid cap index funds.
>> not anymore.
>> not anymore.
>> questions?
we have a four-page bulletin in the backup.
>> yes, sir.
>> and was this shared with employee participants?
>> all employees.
>> when was that done?
>> well, it's been received by -- in fact, I got one at my house yesterday so people are getting it now in the mail.
and what we anticipate doing is also sending out out through the global e-mail system here at the county so that everybody who -- some people may not be a participant now but may be interested in getting into the deferred comp so they will get it as well.
it's through mail and we'll send it by e-mail as well.
>> norman, why don't you and mike talk about the meetings we're going to have with employees and the session.
>> one of the reasons it's important to get the -- this particular bulletin out because it has a schedule of meetings in it, on page 4, as you can see we tried to set up a number of meetings throughout the county in various locations and times so that it would be convenient for all employees and/or retirees who might be interested in getting information on the transition.
and what great west has to offer.
I think 16 or 17 -- 17 meetings throughout the county so we want to give everybody an opportunity for it to be a convenient time and place for them to attend.
we urge all employees to look at the schedule and come to one of the meetings so they can get all their questions answered.
>> in addition to those meetings are schedule he had, if a particular department would like us to come out and meet with them, we would be willing to accommodate that.
>> well, I know I will definitely call you.
>> I have contact information for each of you to contact me and our customer service to help with this transition.
>> thank you.
>> you used to be with the city of Austin.
>> I was with the city of Austin for 23 years.
>> I thought you looked familiar.
I couldn't figure out whether you were a dream or nightmare.
>> [laughter] city of Austin.
okay.
welcome to great west.
>> thank you.
>> if you'll talk about the quiet period and how important it is for employees to --
>> in the transition there will be a period of time when your accounts are not available.
January 22nd at 3:00 in the afternoon will be the deadline for making any changes to your nationwide account.
after that point you won't be able to make any changes.
it will transition over to get west and great west will be available to make changes on February 6th.
>> so in essence --
>> that two-week period where you really -- because of reconciling the accounts and getting them set up you won't be able to make changes.
another great reason why we ask anybody who has questions to come to one of the meetings so we can explain.
>> is there any way you can post just what you stated on our internet so folks that are listening to us, and, of course, we have persons that are retired also that may have an opportunity, those affiliation with the county as far as this program is concerned.
my concern though is that to make sure that this information gets out to as many folks as possible and the number of vehicles we can use to make sure they get in a message.
because it is very important with this period, this quiet time and stuff like that.
22nd of January.
they will do it for you if you don't do it yourself in essence.
and that's what nationwide will do per se.
>> actually it's not a question they will do it for you if you don't do it yourself, it's a question of if you have a change that you would like to see made in your distribution of where you have your money currently invested, you have to do it before 3:00 on January 22nd or else you have to live with your choices until the quiet period ends February 6th at 3:00 in the afternoon.
>> that's very important what she is saying here, y'all.
very important.
>> and if your money at nationwide is in anything but the fixed account, it will automatically be moved into the appropriate similar type of investment at great west -- in the plan as it's being administered by great west.
some of the funds that we have at nationwide will also be at great west.
for instance, the fund that has the largest amount of money in it when we were talking about funds with fidelity and that is available at both.
there's a couple of others that are as well.
the key thing is if you have money in the nationwide fixed account and you would like the flexibility to make changes in where that money is invested after January 21st, then it is necessary for you to decide what you would like to do with that money during the quiet period.
and then when it comes out of the quiet period, you can move it again at great west into whatever you want.
but if it is in the fixed account on January 22nd at 3:00 in the afternoon, then it will be transferred in 60 installments from nationwide to great west over the next five years and you will not have any access to it in terms of making changes to your investment until it makes it over to great west.
and there will be people --
>> or being able to borrow.
>> that's true too.
>> which is very important.
>> like I said, this is very critical.
I think barbara explained it very well along with staff.
explained this is best we can.
however, I think it's important for us to have the necessary information where we can make some financial -- where you can make your financial decisions.
but anyway, if there's any way possible that we can get this on another vehicle, maybe the website or something like that where county employees will have exposure to some of the things we just said.
is that possible?
>> yes, sir.
>> I think we need to also do that because it's very critical at this pivot in the financial process of our county employees.
>> one more thing I was going to say, there will be county employees who do choose to keep their money in the nationwide fixed account as long as they can.
that's the choice and the risk that they are taking.
I'm not trying to say you ought to do one thing or another, I'm just trying to say you need to think about what's important to you and make decisions that are consistent with your goals.
>> but alicia ought to know and that's the whole point.
>> if you are an employee with a fixed account with nationwide today, and you are part of the 60-month transition, you will not be able to borrow against whatever you have in the account?
>> let me go into some detail on that.
the way we have set up the loan administration policy is so that employees will get the best possible situation that we can give them based on what nationwide -- the access nationwide is willing to give us to the money.
so that if you have -- the federal law says that you can only borrow up to 50,000 or 50% of what you have in the account.
so if you have $10,000 in your account, nationwide will not give us access to any of that -- any of the money that is at nationwide, but if you had, like, half of it at nationwide and half of it at great west, 50% of it would be determined on the total that you have in deferred comp which means 5,000 would be available for you to borrow.
and if you had all of your money in the fixed account on January 30th, then you would not be able to get any loan.
if you had divided your investment choices so half was in a fixed account and half in an investment choice, and that moved to great west, then you could borrow 50% of the total that you have in deferred comp which would be 5,000 because you have that at great west.
as time goes this, this will make less and less impact because as the 60-month transition occurs, more and more -- well, halfway through the -- if you had all of your money in nationwide fixed account at the beginning, halfway through that at the 30-month part, half of it would already have been moved over.
so it will be for the first two and a half years that you one of the have access to it for a loan.
but few think you might need a loan, then you probably ought to think about how best to get half of your assets up to $25,000 into great west so that you have the option of taking the maximum loan that would be available to you.
>> if you have a loan outstanding today, if you have a loan outstanding now and you are making payments to nationwide, after their transition starts, do you continue to pay nationwide or make those payments to great west?
>> actually you'll be making them to yourself through great west because you are making them to yourself through nationwide at this point.
and effective the first pay period in February, I believe --
>> February, yeah.
>> the real important thing also to note about that is that if you are making loan payments now, that as opposed to them taking them once a month as an ach withdrawal out of your checking account, they will be coming twice a month out of your -- in other words, say $1,000 that you pay, it will be two $500 payments and it will be direct deposit that there will be notification of all loan participants of that.
>> from a payroll deduction.
>> judge, go ahead.
>> but it is important if all your money is now in the fixed account at nationwide and you plan to borrow it that you change your -- move it from fixed account into another investment before January 22nd.
>> and I guess what the judge is saying, this is -- is that a point of the brochure that we have?
the deals that were mailed out to the public, as far as that particular question that the judge asked as far as the loan?
because I think it's kind of important to know how and what is going to happen if you do have an outstanding balance or a loan that exists right now with nationwide and, of course, great west taking over, how will it be treated.
is that also a portion of that?
>> yes, sir.
>> because I haven't had a chance to go through the whole nine yards of that particular brochure and that's why I'm posing the question.
>> in relation to that, you should note that there is a very glancing comment in the general materials, but that there is a letter that will go out to each and every person who has an outstanding loan that is specific to loans that will get very detailed in relation to loans.
>> okay.
>> the details on loans aren't in the general brochure, but they are in a specific loan-related --
>> material all right.
>> and these topics are covered in great deal in the presentations, the meetings we'll be conducting with the county employees.
>> now, will the schedule he would meetings also be a part of the tools that I have maybe suggested such as the internet as far as letting folks know about it, our employees, along with the schedule?
is that going to be another vehicle we can use to make sure that they understand this is where it's going to happen, y'all, you got some questions, come on and we've got some answers for you.
so is that going to be a part of that?
>> yeah, we have -- also great west had sent us posters, I think 200 posters, I sent an e-mail out to liaisons yesterday to come by and get some posters that they could put up in their departments that has the schedule, that lists all of the scheduled meetings so they can put them up in their office so their employees could see what meetings would be best for them to attend.
>> okay.
>> move approval of 6 f 1 and 2.
>> judge, second with the caveat of extending the other excess tools mentioned such as the internet and any other mechanisms to make sure employees get the information.
>> that's part of the motion.
>> thank you.
I'll second that then.
>> any more discussion in all in favor say aye?
that passes by unanimous vote the Commissioner eckhardt temporarily off the dais.
g, plan sponsor.
>> g, we do not have the final documents on that so we would request that there are be postponed for one week.
>> okay.
>> there is one item that we're still negotiating on that.
I won't give in.
>> we'll have it back on next week.
thank you all very much.
>> thank you.
>> if I could just make one final comment.
I would just like to commend the court for taking this action.
in my professional opinion, the movement of this plan creates significantly better value for Travis County employees in their participation in this optional retirement program.
and if I look out at the -- at other counties in the state of Texas, virtually none of them have -- have taken the action Travis County has to -- to create this value proposition and to make it better for their employees.
and I think it goes without saying that we are all feeling the pain of some very uncertain financial markets right now and as a general rule you can't -- you really can't control what goes on in financial markets, but what you can control are the costs and the values and the services that you get from an overall program like this.
and once again, in my opinion, I think the county has done an extraordinary job of -- for their employees and I salute you.
and I'd also like to take a moment just to thank the folks who have worked diligently on the oversight committee in hammering out these details, but they have -- they've become very proficient in their knowledge of these programs and of different options and how best to meet the needs of county employees.
and it's been a pleasure working with them, it's been a pleasure working with you all too.
>> al, the one thing we should have learn out of this because I'm comfortable with where we've gone, but we have to remember how we got here.
I mean for 24 years, we had not looked -- 28, we had not looked at what we were doing.
unfortunately what you find is if you are not keeping people -- I hate to use the word honest because that means something was dishonest, it's just that you kind of get lulled into this false sense of security to where, you know, if you are not asking sometimes tough questions, I mean and the tough questions in this business is what are you charging me for fees.
I mean what -- I mean what is it costing, you know, people to be in this program.
and I -- I applaud nationwide for what they did whenever it was brought to their attention that we were going to look at this.
I mean because the last couple of years we have really been, you know, the beneficiary of looking into that.
but I hope that this, you know, shows us that regardless of who you are doing business with, if you are not keeping people informed that you are looking at it and you do have committees that make sure that these things are being taken care of, it can happen in a lot of areas.
but I do think that, you know, we're moving in a direction that's going to be very positive for the Travis County employee and the retirees and so thanks for your help.
>> thank you.
>> nationwide is working with you in this transition?
>> oh, yes, sir.
yes, sir.
they are working with us and with great west to assure that the transition goes smoothly thanks to you and the work you did with the president of nationwide, we were able to get additional benefits or secure the benefits for employees that retire or leave that they will be able to withdraw their money.
let me just say that the deferred -- 457 deferred compensation program is a wonderful benefit for employees.
every penny that is in that fund belongs to Travis County employees, and over the last 28 years they've been able cumulatively to save around $31 million, which is what is in that fund.
it is tax deferred meaning you don't pay taxes on it.
it goes into the account before any taxes are taken out.
you don't pay taxes until it is withdrawn.
so it does save taxes.
the loan benefits on this program are excellent, $50 for initiation fee and then $25 a year that you pay.
and then any interest that you pay on the loan you pay yourself interest.
it doesn't go to nationwide or it doesn't go to great west, it goes right into your own account.
so the program is overall very beneficial.
>> ms. Wilson.
>> the other thing, of course, you know is that there has been a lot of negotiations between great west and nationwide about how best logistically to deal with the transition and with the benefit sensitivity and there will be a document that will be coming to the court for them to approve that addresses exactly how the logistics of that will be handled.
thus far I have not seen it so I can't either give it to you or inform you about exactly what it says, but I know that they've been working very hard out.
some day they are going to show it to me.
and then I'll work very hard on it.
>> we'll have g back on next week.
thank you all very much.
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Last Modified:
Tuesday, December 23, 2008 4:27 PM