Meeting Notes - August 22, 2012

Posted by Jay Pompar 
on Aug 22, 2012
 

Charlotte Shelburne Rotary
Wednesday, August 22, 2012, 7a.m.
Trinity Episcopal Church Community Room

Welcome

President Adam Bartsch opened the meeting with the Pledge and called on Kris Engstrom to give the devotional.

Guests were introduced: David Coates, the speaker.

Announcements

Upcoming:

  • August 24:  The club will serve and clear for the Charlotte Senior Center annual BBQ.  Activities start at 4:00 p.m.  John Hammer will be coordinating.
  • August 29: Vermont Mobile Pac
  • September 5: Ann Irwin will speak on VNA Initiatives
  • September 12: Club Assembly – RYLA Report
  • September 13:  Board Meeting, 7:30 AM at the Trinity Church Hall
  • September 19: GSE Team from France will visit and make their presentation prior to a visit to Shelburne Farms. As President Bartsch says, “They will be talking about France and all that.”
  • September 15: Steve Dates discussed the Golf Ball Drop.  The goal is 3,000 balls sold at $10 each.  Members were encouraged to visit other Rotary Clubs in the district. Turn in cash to John Dupee or Steve Dates.
  • October 24: Zack Clemmons – a regular visitor and very popular motivational speaker.  Here is a prime opportunity to invite potential new members.
  • November 4: Bowlathon (a Sunday afternoon 3-5:30).  This is always a lot of fun and is also an ideal opportunity to invite potential new members.

The Hands to Honduras Group will hold a Latin Dance Party on the evening of September 7th at the Shelburne Farms Coach Barn.  There will be a silent auction and Victoria Moore of the Salsa Linda Dance Studio will give dance classes again.  Tickets are available from Linda Gilbert and John Hammer.

The Golf Ball Drop tickets are still on sale and members were urged to keep up their sales efforts. John Dupee said he had more than $3,000 in hand, but with a fist full of new tickets he thinks they might be up to $4,500.  Tickets can be paid for with PayPal.

Linda Gilbert rose to give thanks for the perfect day on Saturday, Sept 18th – Shelburne Day.  The Rotary and Hands-to-Honduras – Tela stand did a great business and represented our club well.  Many thanks to the volunteers, to Will for loaning the grill, and to Todd for making the whole affair possible.

Bill Root spoke of the need for parkers at Shelburne Farms Fall Festival on September 15th.  He has two periods to fill 8-12 (needed 7-8 parkers) and 12-4 (needed 4-5).  The need is particularly great for the afternoon shift.  One or two would also be welcome to help at the front gate.

Sergeant at Arms

Richard Fox took pity on the note-taker and slowed his attack with a joke about a new priest who mistook a septic tank excavation for a gravesite.

Among the Happy Fines given in a blur:

  • Alan Hathaway – fined for having been guilty of some unspecified misstep (unremarked upon by the Note-taker).
  • Trafton Crandall - for his happy chickens
  • Fritz Horton – for a brain scan (huhh?)
  • Linda Schiavonne – for her husband George
  • Terrell Titus – not being able to park this year.
  • John Dupee – for momentum in growing golf ball ticket sales
  • David Rice – trip to South Carolina and his new grandson
  • Gary Bergeron – beginning of the new football season
  • Jim Spadaccini – not having to undergo surgery
  • David Coates (Guest) – seeing Paul Bohne at the meeting
  • Linda Barker – a great Shelburne Day
  • Sam Titus – scoot fine and the joy of school beginning so he can sleep in.
  • Kris Engstrom – told a story
  • Linda Gilbert – saw a wood frog in past week
  • John Hammer – 47th wedding anniversary
  • Paul Bohne – glad to see Jim Spad happy
  • Todd Whitaker – a very successful Shelburne Day
  • Bob Sanders - a good golfing season
  • Joan Lennes – off to Colorado this weekend
  • Pat Sokolowski – vacation
  • Apologies to those who were missed.

Colleen Haag’s ticket was drawn and she made a dramatic show of shuffling the cards on the table.  After a moment’s reflection on which card to draw, she DID IT!  She drew the Joker and won $201.  After the draw, she said that she just knew which card to draw.  Well, Colleen, I hope you went right out and bought a few lottery tickets.

Speaker

Mr. David Coates  (CPA serves on the Commission on the Design and Funding of Retirement and Retiree Health Benefits Plans for State Employees and Teachers, as well as the Governor’s Council of Economic Advisors, the Governor’s Advisory Board for Economic Development, the Vermont Debt Affordability Advisory Committee, and the Vermont Municipal Bond Bank.)

Mr. Coates spoke outlining his concerns for the path Vermont is taking regarding state and teacher pension and retiree health care costs. He suggested that now is the time to act.

Summarizing the problem:

  • Unfunded pension liabilities for state and teachers: $1.2 billion on 6/30/11
  • Unfunded retiree health care benefits for state and teachers: $1.8 billion on 6/30/11.

For a total of $3.0B

He noted that the State has total assets of $3.2B; total liabilities of  $1.6B, leaving net assets (equity) of $1.6B and this will be changing in the next couple of years.

The $3 billion total above only reflects what the state owed as of June 30, 2011 and changes in accounting standards will require that over the next two or three years, these $3.0B will have to go on the Balance Sheet.  When this happens, the rating agencies will reflect this and more than likely the State will have to raise taxes to cover it, otherwise the State will lose its AAA bond rating.

Of concern is that our state pension obligations are 80 percent funded and our teacher pension obligations are only 64 percent funded. Meanwhile, retiree health care costs are funded at less than one percent.

“The Retirement Board and the actuary made an important adjustment as of June 30, 2011, by lowering our rate of earnings on our pension funds to reflect, at least for the short term, the fact that rates are at all-time low and will not achieve rates of return as in the past. This is definitely a step in the right direction, and was partially the reason for the increased unfunded pension liabilities. However, the rate is likely still too high given the current and projected rate forecasts.”*

Retiree health care benefits were $109M in the past year and are paid “as you go” and no provision was made for costs to be incurred in the future. These obligations will continue to expand. To fund these future costs will substantially reduce other discretionary funding in the annual General Fund appropriations.  To make matters worse, the Teachers ‘pension plan is being paid for out of the plan’s assets.

“Despite some good changes that were made to the plans over the last few years, such as increasing retirement age and requiring higher payment from employees, much more must be done to get our fiscal house in order.”*

Mr. Coates suggested the following solutions:

  • Change to a Defined Contribution Plan (401k type) that will take the risk and put it on the employees' individual risks. Some states have already done this.
  • Eliminate Health Care Benefits for new state and teacher retirees but not existing retirees.
  • Require state workers and teachers to shoulder more of the annual benefit costs.
  • Tie pension and retiree health care eligibility to Social Security retirement age.
  • Eliminate cost of living increases on pensions.

In closing he noted that we have only two or three years to fix it.  It’s not the teachers' fault, they were promised it.  It is the way things have been structured.  We cannot keep things as they are.

*http://vtdigger.org/2012/05/17/coates-vermonts-expanding-pension-crisis-2/