Mr. Roscoe Dixon, Chairman, called the meeting to order.

Mr. Dixon asked for a motion to approve the minutes from the meeting held on November 18, 2004.

Motion - Lee Wessels

To approve the minutes from the meeting held on November 18, 2004.

Second - Barbara Palmer

Passed - Unanimous

Mr. Dixon asked for a motion to approve the minutes from the meeting held on December 10, 2004.

Motion - Lee Wessels

To approve the minutes from the meeting held on November 18, 2004.

Second - Barbara Palmer

Passed - Unanimous

Deferred Compensation Plan - Jim Martin and David Pontius

Mr. Dixon introduced Mr. Jim Martin, Deputy Administrator of Human Resources, and Mr. David Pontius, Investment Manager.  Mr. Martin presented the committee with an investment performance report for the Deferred Compensation plan.

Mr. Martin reminded the committee that we bid the Deferred Compensation plan about a year ago and decided that we would conduct a rigorous review of the plan each year and make necessary changes.  He explained that this process would insure that we are offering our employees the best plan possible.

Mr. David Pontius advised that after reviewing the performance report, he determined the following:

Franklin Balance Sheet Investment Fund (Class A)

Recommendation - Map assets to the Dreyfus Premier Small Cap Value Fund (Class R).

This fund is drifting from small value to mid value.  Mr. Pontius explained that this fund has a good long-term record.  He stated that although Nationwide recommended we close this fund, the committee may want to consider keeping it based on its good performance.

Fidelity Magellan Fund

Recommendation -  Map assets to Fidelity Contrafund

Mr. Pontius explained that this fund currently has 293 participants with assets of approximately $1.2 million.  He stated this fund is not performing well and has gotten so big it has essentially turned into an index fund.

The Contrafund has consistently out performed the S&P 500.

Employees will get the same style investment with a much better return. 

SEI Index Funds:  S&P 500 Index Fund (Class E) and Gartmore S&P 500 Index Fund (Instl Svc Class)

Recommendation - Map assets to the State Street Equity 500 Index Fund (Service Class) - lower cost option and eliminate duplication

The SEI fund has 560 participants with assets of approximately $2.3 million.  Gartmore S&P 500 has 63 participants with assets of approximately $290,000.

Mr. Pontius explained that the SEI and Gartmore funds have high fees to manage the plan.  By switching to the State Street Equity 500 Index Fund, employees will receive a greater return because of the lower management fees.  He stated that he highly recommends that we close this fund.

MDL Broad Market Fixed Income Fund - duplication and low participation

Recommendation - Map assets to PIMCO Total Return Fund (Admin Class)

The MDL fund has only 11 participants and assets of approximately $10,000.

Mr. Pontius advised that the PIMCO fund will offer participants the same index.  Additionally, this change will affect so few participants and we should keep the better of the two managers.

Mr. Martin stated that these are all of the basic recommended changes to the Deferred Compensation Plan.

Additionally, Mr. Martin advised the committee that Nationwide has put together a new color brochure quarterly report for participants that will show personalized returns.

Motion - Janet Shipman

To accept the recommended changes to the Deferred Compensation Plan as presented by Jim Martin and David Pontius as well as keep the Franklin Balance Sheet Investment Fund as recommended by Mr. Pontius.

Second - Kenny Armstrong

Passed - Unanimously

Health Plan Status - Jim Martin and Jim McKay

Jim Martin informed the committee that our consultant, Mercer, has provided us with the numbers regarding the performance of the health plan.  He stated it was very good news.  The overview of the two health plans and the prescription drug plan shows that we operated at a loss ratio of approximately 87% for the first seven months of the fiscal year. 

Mr. Martin advised the committee that it is about the time of the year for the committee to do a review of the health plans in preparation for the next fiscal year beginning July 1.  He stated that a meeting to do this will be scheduled probably during the week of March 28th.  He explained that he does not anticipate any big changes to the plan.

Mr. Martin provided the committee a copy of an article he read in Governing magazine that discussed retiree health care.  He stated that in 2006, governments will have to report the health benefits we offer retirees as a liability.  He explained that approximately five years ago, we conducted an analysis on retiree benefits and we determined the cost was approximately $250 million, and could be closer to $400 million now.

Mr. Martin explained that we do not pre-fund retiree health care as we do with our retiree benefits.  We fund retiree health care on a year-by-year basis. 

Mr. Martin explained that this new rule is significant because the County is currently $1.7 billion in debt and bond agencies will take the liability of retiree health and add it on, which would mean the County could actually show a debt of approximately $2 billion.

Other Business

Mr. Charlie Hubbard presented the committee with a proposal for use of unused sick leave for their review.  He stated that he believes this proposal would help the County as well as employees.  He explained that if long-term employees could use their unused sick leave toward their service and retire, the County could bring in entry-level employees at a lower rate.

Mr. Dixon asked if this proposal had potential merit.  Jim Martin responded by stating that there is some cost dealing with retirement not shown in Mr. Hubbard's proposal.  He stated when you give time for credit there is a long-term cost that is added to pension costs.

Mr. Steve Stamson stated that if employees could use unused sick leave toward retirement, employees might stop abusing sick leave.

John Kramer, Deputy Sheriff's Association, stated that in the past, good employees do not use their sick leave and this could be a way to reward employees.

Mr. Tony Johnson, Fire Fighters Union, stated that this proposal may be an incentive for bad employees to quit using their sick leave.  He stated that he would like representatives from all departments be present and offer input when this proposal is reviewed.

Mr. Dixon advised Mr. Hubbard that we will review his proposal.

Ms. Lee Wessels requested that the minutes from the committee's meetings be placed on the internet portal.  Mr. Dixon advised that we could post the minutes on the internet portal.

Meeting adjourned.

Respectfully submitted,

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Trisha Monteil, Committee Recorder

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